OBJECTIVES
At the end of this chapter, you will be able to:
- understand how the sale function in an organization is managed;
- know about the typical characteristics of a sales executive;
- learn how sales acts as a link between the customer and the organization;
- realize the duties / job responsibilities of a sales person;
- understand the process of recruiting, selecting, training and assigning a sales person to the job;
- understand how the sales department is structured and learn the elements of selling;
- know about compensation and performance evaluation methods.
INTRODUCTION
The customer is king. Without customers a business cannot survive. The first and usually the only persons the customer actually meets are the people in the Sales Department. Hence for the customer, the Sales Executive is the company.
The sales function is vital to the organization, since it generate the revenue essential for its survival and growth. It is charged with the responsibility of achieving the budget volume of sales units at maximum price recovery and minimum selling costs so as to earn the full profit potential. In a highly competitive market, slackness in maintaining a high level of sales pressure can result in loss of market share.
The Sales Department should be organized to cover the entire geographical area of operation (target area) by deputing Sales Executives/Salesmen to visit the areas at regular intervals. The Sales Executives visit their customers or prospective customers, either with prior appointments or by making cold calls (unscheduled meetings). They explain about their organization, products, how the products will benefit the customer and try to get the orders. They have to be well-groomed, well-mannered and well-informed about their products and possess good communication skills in order to succeed. It usually takes more than just one sales call to get an order. Sometimes the decision to buy is based on price, sometimes on other considerations like quality - of the product, payment terms, reliability of supplies, references, etc. In the case of government orders, it is usually based on price and done through the tendering procedure.
The Sales Manager will ensure that adequate stock of a product is sent to the wholesale/retail dealers, so that it is available to the consumer at point of sale.
In the case of sales through distribution channels, salespersons interact with wholesale and retail dealers of their products. When there are no such intermediaries, they deal directly with customers. From these interactions, they estimate the monthly/quarterly/annual requirements of a product. They give their feedback to the Sales Department. This department compiles and processes this information and sends it to the Production Department to develop its production-plan accordingly.
POSITION OF THE SALES FUNCTION IN AN ORGANISATION
Position of the Sales function
Sales, as an operation, links the organization to the customer. Its internal link to the organization is mainly Marketing and Production. Fig. 1 depicts its internal link to the organization and external link to the customer.
Fig. 1 Functional context of Sales
Sales is the primary feedback system that provides information about the customer to the organization. Based on this information, strategic decisions are made regarding product-characteristics, customer segmentation, marketing-strategy, production-plan, sales-force structure, etc.
WHAT MAKES A GOOD SALES EXECUTIVE
Let us look at some of the common features of a good sales person.
Basic Characteristics
The main aim in selling is to procure an order from the customer for the company's products. By nature the job is tailor-made for extroverts who are well-equipped with information, capable of convincing the customer on the benefits of the product.
Sales Executives are constantly on the move meeting customers or their own colleagues in Marketing and Production. They are self-confident, outgoing and pleasant in manner and speech. In dealing with outside customers, their highly developed communication skills, enable them to convince customers that their needs can be fully met or exceeded with the company's products and their convincing approach enables sales to be clinched. With internal customers (colleagues), they can be very friendly and persuasive so that others find it difficult to refuse. Their enthusiasm in their work derives from an honest belief in their products and their conviction that the maximum number of people must benefit from their use.
Anyone can train himself to be a Sales Executive. Like any other business function, it can be practiced and one can learn a lot from experience. Selling comes naturally to a person who has the inherent ability to make persuasive and fluent conversation.
Take the case of a child pleading with his mother: "That pencil box is exactly what I wanted. If you buy it for me I promise not to lose any more pencils. See, it is big enough to hold four pencils, a ruler, an eraser and a sharpener. Look, there's even a pouch to keep my stamps. It is unbreakable. So I won't pester you to buy another one for a long time. Please, mother, please!"
Coupled with a winning smile and actually placing the pencil box in his mother's hand, so that she can see the product herself, the child has succeeded in "selling" the idea of buying the product for him. He has done this selling by explaining the product-features and benefits and has convinced the customer that it is the right product to be purchased to meet his need.
Anyone who hears such a logical and convincing sales-talk from a child, will certainly buy the pencil box for him. The child's innocent, honest and enthusiastic approach is what a Sales Executive should do to make a sale. The commitment, sincerity and effectiveness of communication distinguishes a good Sales Executive from an ordinary one.
Order Takers and Order Getters
These days, in any business, Sales Executives are often required to be order getters rather than order takers. Suppose there are two sales persons trying to sell a set of pens. The following scenario illustrates how the two types of sales persons will make a sales pitch.
Order Taker : "Good Morning, Sir. Would you be in need of these pens? "
Customer : "No Thank you, I have enough pens and I don't need anymore".
An Order taker is a passive seller who assumes that if a customer really needs something, he will place an order without much persuasion.
Order Getter : "Good Morning, Sir. I can see you have a couple of pens. But honestly, the pens I have here will add value to your image. The prestigious name of our company - Silkwrite, is etched here on this elegant pen handle. Just look at the way the ink flows when you use the pen! It does not blot or smudge. The attractive colors will match most of your shirts. Let me open the pen and show you the refill. Such thick refills are not offered by any competitor. Therefore, this pen lasts for a long time. A special kind of chemical in the ink prevents it from drying up or thickening."
An Order Getter is an aggressive seller who will not be satisfied until the customer is completely convinced that the product will be of use to him for reasons within the product itself. This sales person believes that the product is absolutely essential for the customer, but the customer himself is not aware of it because the product features are not known to him. The sales person sells benefits to the customer.
Job Requirements
A sale is completed when an order is procured. It is executed by dispatching the product followed by receipt and acceptance by the customer and finally the agreed payment is made on time.
A sales person must be thorough in the following areas:
- Product Knowledge: A full understanding of the product in relation to how its features are designed to meet needs, advantages over competitors' products, price in relation to competition, quality, special concessions introductory offer, seasonal discount, etc.
- Distribution Channels: Direct from company depots, through distributors and/or retailers, through commission agents or representatives etc.
- After Sales Service: Guarantee terms, repairs or servicing, technical guidance/support etc.
- Product Potential: Industry application of the product, location of end-users and volumes required in generic terms.
- Customer Knowledge: Buying procedure, decision-maker, end use of product, special service conditions, frequency of repurchase, potential, etc.
Company Goals
Ethics and values set out by the organization also contribute to the molding of a sales person. If the organization is committed in writing and practice to Sales Quality Procedures, a sales person not adhering to these will not fit in.
For example, Company A may decide not to sell an industrial product to households because it is committed to the safety of homes. Company B may sell a similar product to all segments of customers, if it feels its product has enough safety features to be used anywhere.
The kind of Sales Executive required for an organization will depend on the policies for Sales set by the organization.
A company may sell technically complex products. In this case, its Sales Executives may be required to possess technical qualification. It may require only passive sellers if it already has a high market share and mature, steadfast customers. The sales strategy may be to assign one Sales Executive to an entire territory, in which case, the person may have to handle sales independently.
SALES DEPARTMENT - ORGANISATION
The organization of a Sales Department depends on the kind of product or service that is being sold by the company. In other words, the structure is based on product, territory or customer.
Consumer Products are sold in retail directly to the general public through shops and departmental stores. These products are toiletries, stationery, confectionery or durables like fans, TV sets, refrigerators, etc.
Industrial Products are sold to factories that make other products. For example, machines, pumps, electric motors, etc. The selling is generally to the actual user.
Services are sold to customers by hotels (boarding & lodging), airlines (travel), etc. These are intangible products or services.
Consumer Products
If the company is dealing with consumer products of one category (say toiletries) within the same market segment, then the organization would be designed on a geographical basis. There could be Regional Managers at metros, say Delhi (for North), Mumbai (for West), Kolkata (for East) and Chennai (for South), all reporting to the General Manager - Sales, who is located at the Corporate Office. Depending on volumes generated in each geographical area, there could be Branch Managers at major cities in the Region, reporting to the Regional Manager. Finally, Sales Executives, reporting to Branch Managers, would be located in important towns handling all sales within the areas allotted.
The organizational structure would look like Fig.2:
Fig. 2 Sales Organization - Consumer Products
The distribution channel for consumer products starts from the Company's factory(ies) to major distribution centers located in large towns who dispatch the products to dealers/sub-dealers (usually wholesalers) from whom the final retailers (shops) receive their requirements. The Sales Executive must study these channels closely and understand the processes, problems and incentives at each stage. Appropriate solutions must be found at every step to maximize sales within the framework of the company's policy. Suggestions based on real-life experience should be made so that they can go up the line of command within the company. Thus the Sales Executive who has the first-line contact with the market-place, provides the "eyes and ears" for the Company. His suggestions and views would be considered seriously in revising marketing-strategies, sales-policies, and in solving product or customer-related problems.
Industrial Products
These are usually highly specialized products. Intensive technical training is imparted by Marketing Managers to sales persons. If the Company is dealing with a variety of industrial products like pumps and electric motors, then the organizational structure would be product-oriented.
Thus there could be two Sales Executives at many major cities like Bengaluru, Ahmedabad, each reporting to his respective Sales Manager for the product. Where a customer buys both pumps and motors, these Sales Executives will co-ordinate between themselves in common areas like order follow-up, collection of payments due, etc.
Since industrial products are usually sold directly from the company to the factory end-user, the Sales Executive has to be constantly in touch with the key user in each factory. Firstly, he has to understand the actual usage and parameters for product being sold. Secondly, he has to win the confidence of the foreman on the factory shop floor, the Production Manager, the Purchase Manager and the Factory Manager - on occasions the Accounts & Finance Manager may have to be contacted while collecting payments and /or overdues. He must know the decision-maker and the decision-making system in each of his customer's organizations.
Complex Structure
A combination of the above structure may be needed when the Company sells a wide range of products. For example, Sales Executives may be assigned one or more products within a designated geographical area. The Sales Manager for a Region is responsible for all the products sold by the several Sales Executives reporting to him.
Sales Administration
This is a service function within the Sales Department that handles the routine paper-work and inter-functional co-ordination. Experienced Sales Executives with lots of field experience and a thorough understanding of the Company's working systems and procedure, are usually assigned this responsibility. Data on sales-performance versus targets, order-position, factory co-ordination, inventory-management, overdues-analysis, sales-trends and statistics are generally handled by this section.
DEVELOPMENT OF A SALES EXECUTIVE
A good sales person is expected to have two basic characteristics - empathy and ego-drive. Empathy is the ability to perceive what the customer wants and ego-drive is an impending personal need to sell a product. He must also enjoy responding to challenges, effectively interacting with all kinds of people, and be good at customer-servicing.
These qualities have to be screened at the recruitment stage itself, and/or provided through training and development programs.
Selection and Recruitment
Most companies take great care in drafting advertisements to fill vacancies. The essential and desirable qualifications and experience are spelt out, as also the age span. The location may be mentioned but most jobs carry the condition of transferability to any part of the country. The range of emoluments may be mentioned, but details can be obtained only at the interview.
Your resume must be clearly structured, so that there is no difficulty in fitting your data with the job requirement. Additional information, only if pertinent, should be included.
In an interview, the questions will probe general business knowledge and test ability to grasp the critical issues in given situations. Simultaneously, grooming, manners, conversational ability and communication skills are observed. Usually, the General Manager - Sales, the concerned Branch Manager and the HRD Manager conduct the interview. Sometimes written tests, group discussions, personality tests and special selection procedures may also be used.
Evaluation criteria for a Sales career are:
- Likeableness and sincerity.
- Cheerful and outgoing attitude.
- Self-control under stress.
- Inner drive and commitment to succeed.
- Service-orientation.
- Communication skills.
- Business sense.
Each company its own interview-rating system. At the first stage, a short-list of two to three candidates against each vacancy is developed. The short-listed candidates are called for final rigorous interview on the basis of which offers of appointment are made to selected candidates. A medical examination to ascertain physical fitness may be conducted.
Training
Candidates who are recruited by the company have to undergo training on topics related to the overall working of the company and on relevant selling techniques. This will make the candidates familiar with the company's culture, mission, organizational structure, policies, procedures and products before taking over the job.
a. Induction
This phase covers the following subjects/topics:
- Business scene relevant to the company: Industry Environment.
- Company history, current performance, future plans.
- Overall organizational structure.
- Sales Department organization in detail.
- Job outline of each position, reporting relationships and co-ordination methods.
- Product range, specific applications, potential markets.
- Company's business policy, ethics, standards, procedures, etc.
b. Product Knowledge
The next phase in the training program deals with educating the sales person with the features of the company's products. Product knowledge is one of the most essential requisites for a sales person. Experts from Production, Research & Development, Marketing etc. explain the benefits of a company's products, in what market segments these products will sell and what are the unique features possessed by the products.
In every Marketing Department, there will be a Product Manager for a product or group of products with similar characteristics. For example, if pharmaceutical company also markets toiletries, there will be a Product Manager - Pharmaceutical products and another Product Manager - Toiletries. The respective Product Manager(s) will brief you depending on the product(s) you are selected to handle.
The Product Manager is an authority on his product. Having studied the market requirements he has worked closely with R & D to develop the product, with Production at all stages of manufacture and with Quality Control for testing compliance with specifications. So listen to him carefully and whenever you have doubts regarding product characteristics, go to him for help.
To be effective as a sales-person, you should be convinced about the value and efficacy of the company's products. Take a customer's perspective and do not stop asking questions. It is all right to ask "stupid" questions. Many customers may in future, ask similar questions.
You should not only know your product(s) inside-out but also how and where they are used, the benefits in both qualitative and quantitative terms, pricing vis-a-vis competition, major competitors' products and the plus and minus points of your products relative to competition, major customers and current market-share, present sales strategy and future new product launch plans.
c. Selling Techniques
This part of the training emphasizes the method which will be used by sales persons to sell a product. A whole chapter is devoted to this aspect. Here, we will briefly discuss these techniques.
A majority of sales-training programs consist of the following steps:
i. Prospecting and Qualifying
Prospecting is identifying customers by developing leads. Leads can be developed by asking current customers for references, seeking data sources, subscribing to relevant publications, etc. Qualifying a prospect implies screening his background, buying history, credit records, etc.
ii. Pre-approach
Pre-approach involves equipping oneself with knowledge about the prospect's company and its current buyers. Before making a call, the sales person should make out a list of objectives he seeks to achieve. An overall sales-strategy needs to be formulated. When a live demonstration of the product is made, the sales person must make sure that the product functions properly. Sufficient backup must be taken and in case of product failure, a replacement should be readily available.
iii. Approach
The manner in which a sales person presents himself to the customer contributes to at least 15 % of the actual sale. If first impressions are not good, the prospect closes his mind on the sale even before it starts. The appearance of the sales person, his opening greeting, the firmness of his hand shake, confidence in approach, etc., are all important to start a good sales presentation.
iv. Presentation and Demonstration
During the actual presentation, the sales person describes product features, lists its price and performance advantages, basically explaining how the prospect will benefit from the purchase. The AIDA method of getting Attention, holding Interest, arousing Desire and obtaining Action is commonly used by sales persons. A live demonstration of product-usage may also feature at this stage.
v. Handling Objections
Almost invariably, customers will have some objections to purchase a product. The sales-person should be able to handle these questions with a positive approach. On most occasions a straightforward and open discussion of the objections is appreciated by the customers. If the company's product does not provide a feature that a customer wants, it is best to accept this fact and offer an alternative to satisfy the customer's requirement.
vi. Clinching the Sale
All efforts so far are of no use unless the sale is clinched, by getting a written order from the customer. This calls for a killer-instinct similar to a hockey player shooting for the goal, after dribbling past and dodging opponents. When the customer shows even the slightest inclination to place an order, the opportunity should be seized immediately.
d. Reporting Procedures
The sales person is the most important link with the customer. The organization can make effective use of information gathered by sales persons regarding customers and their needs, how they perceive the company's products and whether the company is producing and selling to meet the expected demand.
Reports written by sales persons provide such information. A typical Sales Call Report may look as in Fig. 4.
Fig. 4 A Typical Sales Call Report Format
Formalities regarding reporting form the last part of the training program.
e. Training Aids
Organizations often use one or more of the following aids to train Sales Executives:
- Lectures by experts, internal and external to the organization
- Sales conferences and conventions for sales persons
- Sales manuals describing the requisites of a sales person, product data, selling procedures and tips
- Role playing - where an actual selling situation is simulated in the class room
- Sales trainees go with the company's sales persons on sales calls to under go on-the-job training by actual observation followed by supervised trial selling
- Visual aids like video films, television programs, audio visual aids, etc., are used to demonstrate the content of the selling process.
Compensation and Incentives
The selling job is very unique in nature. Many believe that selling is an art. It often requires travelling. The job is complete only when a sale is accomplished. By definition, a lot of external factors are involved in execution. All these factors of uncertainty call for adequate compensation for retention of a good group of sales persons.
Two aspects are considered in fixing compensation.
Level of compensation: This is the outer limit to a sales person's compensation range. To a large extent, the market decides this limit. If, on the average, organizations in an industry pay their sales persons a certain amount, this figure can be used to fix the compensation.
Components of compensation: Sales force compensation comprises a fixed amount, a variable amount, expense allowance and fringe benefits.
The fixed amount is the salary that a sales person will draw irrespective of number of successful sales calls he makes. The fixed amount is intended to offer basic financial security to the sales person.
The variable amount may be commissions, bonus, sales incentive, etc. This is in direct correlation to the number of successful sales calls a person makes. The variable amount may be related to the number of products sold or fulfilling a quota, or achieving a certain rupee value of sales, etc.
Expense allowance compensates the expenses incurred for travel by the sales person within his territory to make necessary sales calls.
Fringe benefits are provisions like medical leave, paid vacation, accident insurance. These are intended to provide security and job satisfaction.
Due to the fixed and variable components of compensation, different types of compensation methods can be adopted: direct salary, direct commission, salary and commission. The last mentioned type is the most commonly used compensation method.
At the end of all these procedures, a sales person is ready to take up his job in the field.
Job Assignment
After the training is completed, a sales person is assigned to a territory. The sales person is provided with the sales plan, sales quota, call report, prospecting duties, expenditure reporting form, etc.
The sales plan is a detailed description of how many products the company as a whole aims to sell; how this is divided among the sales force and as an individual sales person or a group of sales persons; what is the sales target that is to be achieved within a specified period of time. A sample sales plan is shown in Fig. 5.
| Product: S101 Product Name: Air-Conditioner Year: 1996 Annual Sales Target: 16,000 units QUOTA: PRODUCT: |
| Sales Executive | Annual Target (In Units) | Unit Price (In Rs.) | Territory | Sales Target (In Lakhs of Rs.) |
|---|---|---|---|---|
| Feebi | 6,000 | 22,000 | South | 1320 |
| Asma | 8,000 | 20,000 | West | 1600 |
| Issac | 2,000 | 22,000 | East | 440 |
Fig. 5 A Sample Sales Plan
Based on this plan, each sales person is allocated a certain number of units of the product that he is personally responsible to sell within a certain period of time. This is the sales quota. For Example: Based on the sales plan in Fig 5, the sales quota for Feebi for the first five months may be defined as:
| Months | Units to be Sold | Unit Price (In Rs.) | Area / Location | Sales Promotion |
|---|---|---|---|---|
| January | 500 | 19,800 | Chennai | Off Season discount (10% off = Rs. 2200) |
| February | 300 | 22,000 | Chennai | |
| March | 1000 | 20,900 | Chennai | Summer Sale (5% off = Rs. 1100) |
| April | 1500 | 22,000 | Coimbatore | Trade show |
| May | 1500 | 18,700 | Chennai, Coimbatore | Summer Sale (15% off = Rs. 3300) |
Advertising involves five major factors which are called the 5-Ms. They are as follows:
Apart from selling to existing customers, a sales person is expected to attract new customers for the company's products. Some organizations may make this a mandatory requirement in the sales person's job profile. The amount of sales time that must be spent on prospecting is provided as part of the Sales Executive's job assignment.
HOW DO I KNOW HOW I AM PERFORMING?
Most organizations have specific procedures to evaluate the performance of its sales force. A Sales Report is an effective evaluation tool:
Sales reports are divided into two parts:
- Activities planned for the future (Example: Sales person's Work Plan) and
- Report of completed activities (Example: Call Report).
Sales persons are informed about their performance, through these evaluations.
Apart from the above evaluation method there are formal evaluation methods practiced by organizations. Formal methods allow the management to set down standards for evaluation, to be well informed of sales force performance, and to hold sales persons accountable for their performance. Three of these techniques are described.
a. Comparing Performance among Sales persons
This method compares and ranks the sales performance of each member in the sales force. For example: In the month of January, Sumanth has sold 150 pieces; while in the same period, Pandu has sold 201 pieces. All other conditions of selling remaining the same, Pandu is a better sales person.
Sales performance may be measured by the rupee amount of sales made by each person, number of new accounts opened, persons with least number of customer complaints, etc.
This method is ideal for organizations where there is uniformity in the sales process across territories. The product mix, customer profile, competition, work load, etc. need to be the almost same for each sales person.
b. Comparing Current-to-Past-Sales
For each sales person, the sales performance is assessed over several months or years. Net sales of each product, percent of quota completed, profit contribution, sales expenses, number of new customers, number of lost customers, etc., are data that feature in this assessment. Based on these a sales person's performance can be evaluated. Refer the table given in Fig. 6, and assess how Swetha has performed.
SALES RECORD FOR THE YEARS 1992 - 1994
Territory: West Sales Executive: Swetha
Product Category: Air-conditioner
Product Id: S101
| 1992 | 1993 | 1994 | |
|---|---|---|---|
| Net Sales (S101) | Rs. 1200 Lakhs | Rs. 1210 Lakhs | Rs. 1300 Lakhs |
| Quota | Rs. 1220 Lakhs | Rs. 1300 Lakhs | Rs. 1350 Lakhs |
| Percent of Quota Completed | 98.4% | 93% | 96.3% |
| Gross Profits | Rs. 1.2 Lakhs | Rs. 98,000 | Rs. 1.3 Lakhs |
| Sales Expense | Rs. 73,000 | Rs. 85,000 | Rs. 90,000 |
| Number of calls | 662 | 701 | 694 |
| Average Cost per Call | Rs. 120 | Rs. 152 | Rs. 200 |
| Number of New Customers | 5 | 8 | 18 |
| Number of Lost Customers | 2 | 3 | 6 |
| Average Sales per Customer | Rs. 26,000 | Rs. 18,000 | Rs. 20,000 |
| Average Gross Profit per Customer | Rs. 1,875 | Rs. 2,000 | Rs. 2225 |
Fig. 6 A sample Current-to-Past-Sales Evaluation
c. Qualitative Evaluation
Personality trait and individual skills contribute a lot to a person's ability to be a successful sales person. Personal interviews and review sessions, departmental meetings, presentations and seminars, personality development courses, etc., can be conducted to know if a sales person is capable of handling his job. Any change in laws and policies will be communicated to the sale force as soon as possible.
AFTER THE SALE
The responsibilities of a sales person does not end with the closure of a sale. As the primary department interacting with the customer, it needs to perform certain other activities after the sale is completed.
Supply of the Product
On taking the order, the Sales Executive reverts to his headquarters. There he compiles a list of the buyers, area-wise, with the required quantity shown against each. He sends this requirement to the Production Department which will arrange for packing and forwarding the goods, keeping the Sales Department informed.
Consumer products like toiletry, clothing, footwear, etc., are sold in large quantities, but to different buyers. Hence, the producer and consumer do not meet at any point of time. For instance, Bata shoes are made at one or more of the production centers, but sold at all retail outlets throughout India. Bata Shoe Co. and the ultimate buyer do business through the retailer, i.e., the Bata dealer in the buyer's area.
For products like, soaps, toothpaste and clothing, we have wholesalers who buy in bulk straight from the factory and distribute to retailers who stock the items for individual sale.
However, it is the Sales Executive's job to meet wholesalers and stock retailers to ensure smooth supply, to ensure that there is adequate stock at all times and consumers are keen to buy the product. He/she cannot afford to lose contact with the customers because they may well switch over to another brand when approached by others.
In the case of capital goods like machinery or consumer durables or fixed assets like, housing, there may not be any middlemen. The builder and the buyer of a house need to have personal contact with each other. In purchase of machinery, although there may be dealers. the producer may still meet the buyer. Installation of machinery may require the producer's expertise which the dealer may not have.
a. After Sale Service
The seller's role does not stop with selling. He should follow up his sale by enquiring the buyer whether he received the required product on time, and in proper condition.
After sales service is essential in the case of machinery and consumer durables like television sets, washing machines, etc., which need spares from time to time. Even for the normal functioning of the system, servicing is called for. The seller's relationship with the buyer thus continues well after sale. In most cases, a service contract beyond the stipulated period of guarantee is entered into. During the warranty period, service is done free, and thereafter for an annual charge. (Sales use warranty for guarantee generally as guarantee has a wider coverage).
b. Customer Problem Redressal
Customers often face problems after they have received the product.
This may be due to many reasons:
i. The product does not conform to the original order.
ii. There may be deterioration in quality after it reaches the buyer (food and other perishable items are examples).
iii. It may develop a defect as in the case of electronic gadgets.
iv . There are operational problems due to lack of clear instructions.
v. Faulty design.
vi. Change in operating environment.
In such cases, it is the duty of the seller to rectify the defects by deputing either a sales person or an engineer, as deemed necessary.
Redressal or solving a customer's problem in connection with the product sold is part of the role of a Sales Executive. It speaks of his integrity, sense of fair play in business and acts as a further incentive to the buyer to continue his business relationship with the seller. It breeds trust which is essential in business, as much as it is in personal relationships.
Collection of Outstandings
In the pursuit of business goals, the seller comes across many buyers who may be wholesalers/retailers or direct consumers, who lack ready liquid money to pay for the products.
The sellers often give goods on credit by agreeing to take payment after a specified time. This is most applicable in the case of organizational purchasers. Also dealers, are middlemen who stock large quantities to meet the demand and they cannot be expected to pay for the stocks immediately.
Credit Sales results in money remaining Outstanding for long periods. Collection of Outstanding bills is the salesperson's additional (but a crucial) responsibility.
The Sales Department keeps a list of buyers to whom credit can be extended. This is based on their assessment that the buyer is creditworthy. The sales personnel, in their anxiety to push sales, may promise liberal credit facilities to all types of dealers. This tendency is undesirable. Credit limits are usually established by top management for each buyer and sales personnel must operate within these limits.
Commercial banks generally help the seller in collection of bills raised by the seller on the buyer. Documents are routed through a bank (which sends them to their branch established at the buyer's place.) The other branch (called the 'drawee' bank) hands over the documents to the buyer (bill, lorry receipt and invoice) after collecting payment after a period agreed upon.
CONCLUSION
Selling is a highly challenging and rewarding career line for people interested in outdoor activities. There is a phenomenal dearth of talent in this field. Most organizations recruit fresh graduates with the drive, from any stream of studies and train them on the field offering high incentives. Sales Executives, Sales Officers, Sales Engineers are typical designations for entry level sales people. The growth opportunities are very high and bright people who have an early grounding in sales have risen very fast to top levels in many industries.
TOPICS FOR ADDITIONAL READING
The important documents relevant to sales are described below:
Customer Order
This document, as the name implies, is the order which the customer places on the Sales division. He has an idea about the price structure, discounts allowable and terms of payment either from the price catalogue of the organization or through correspondence.
The Customer Order indicates the quantity required and the price agreed upon between him and the seller, and also the place and time of delivery. Sometimes, the customer may request for staggered delivery. The Customer Order also indicates the terms of payment as agreed upon. This Customer Order forms the basis of the supply of goods by the seller and is usually sent in duplicate of which, one copy is returned by the seller to the customer as a token of acceptance.
Delivery Challan
This is a prime document evidencing the supply of goods to the customer, prepared and signed at the time of delivery of goods to the customer. One copy is given to the customer and the other is returned to the customer to be attached to the invoice, as evidence for the supply of goods covered in the invoice.
Invoice
This is the document which the seller sends to the customer indicating, among other things, his indebtedness for the purchase of goods from the seller at the stipulated price and also indicating the due date for payment.
If the terms of payment are cash against delivery, then, when the goods are delivered, the payment is received and the invoice is submitted to the customer. However, if the customer is allowed some credit, say, for a month or two (depending on customer category and sales policy), the invoice along with the delivery challan is forwarded to the customer well ahead of the due date.
The Invoice contains:
- Product code
- Product description, quantity, rate and value
- Associated charges like handling, insurance, postage, packing and forwarding, service charges, and local or Central Sales Tax, as applicable
- Any discount allowable, is also indicated and the net price to be paid is arrived at.
Reference to the number and date of the Customer's Order.
Particulars of the receipt of the carrier through whom the goods were dispatched.
Mode of payment: Whether against cash or through the bank. Credit if any, and due date for payment.
The invoice also refers to local Sales Tax and Central Sales Tax (C.S.T) numbers as authority for collection of the relevant taxes.
At the back of the invoice, the terms and conditions of sale are listed out and the buyer is bound by these conditions.
As soon as an invoice is issued, a note is made in the Sales Journal to register the transaction. From the Sales Journal, at the end of the month, the transactions pertaining to a customer are entered in the ledger and the product inventory, to bring down the level of stock.
Sales Journal
The Sales Day book or Sales Journal as it is called in Accounting terminology, registers the day-to-day credit sales to customers. At the end of the month, the Credit Sales are totaled and a consolidated accounting entry is made in the Product Inventory Account and the individual Customer Ledger Account increase its indebtedness to the extent of the sale.
The Sales Journal facilities entry , in the sense that it consolidates all Credit Sales transactions in one place and effects the accounting transactions once every month.
Customer Ledger
All sales transactions relating to a customer are recorded in this ledger. While cash sales transactions are noted then and there, Credit Sales transaction are noted at monthly intervals in a consolidated fashion from the Sales Day book.
Receipt of money from the customer is also entered in the ledger.
At any point of time, the balance in the ledger shows the amount the customer owes to the company.
Credit Notes
Customers who return the products sold, for any valid reason, are furnished with a credit note which signifies that their account will be credited for the value of the note. Sometimes issue of credit notes becomes necessary, if the product is overcharged, or if a discount is applicable.
In big concerns, the practice followed is to register all the return in a single book and make consolidated entries at the end of the month.
RECAPITULATION
- The sales function requires dynamic interaction with several departments in an organization. It is the primary link between the organization and the customer.
- A good Sales Executive should be enthusiastic, intuitive, assertive, aggressive and have a strong personal urge to make a sale. He needs patience, perseverance and persuasive power.
- A sales person requires thorough knowledge of the product, distribution channels, the customer, product potential and after sales service.
- An order taker is a passive seller; An order getter is aggressive seller.
- The sales force in an organization can be structured around its products, its customers or the territories where it sells its products.
- Sales Executives are molded to suit an organization at the time of recruitment. On-the-job training on the product, selling techniques and reporting procedures further support this process.
- A variable component in a sales person's compensation provides incentive for making a sale.
- Sales quota is the target volume to be achieved by individual Sales Executives.
- Evaluation of performances can be made by comparisons among sales persons, comparing current-to-past sales and qualitative evaluation.
- After receiving a written order from a customer, a sales person is responsible for ensuring prompt product delivery, rendering after sales service and addressing customer complaints.
