The significance of relationship building and its priority in the armoury of a salesperson, when compared to the other selling-skills, is well conveyed by Steven Brown in his article in American Salesman when he says that companies need to redraw their sales training programs to put more focus, time and effort on teaching relationship-building skills rather than on presentation skills and sales closing techniques.
This requires salespersons to refrain from pushing the customer to make an immediate sale and instead, take time to understand the relationship with the customer and then offer a solution to solve a particular problem of the customer. Today’s customers are exposed to sales and marketing messages all around them, and so it’s the relationships that will ultimately make the difference between the good salesperson and the bad. Today the challenge for organization is in finding a sales account rather than a single odd sale, because an account is a customer that comes back and makes purchases frequently.
Repeat- customers happen when the salesperson builds relationships with them. When there is mutual bond of trust between the buyer and seller this leads to a win-win relationship where both parties benefit. With relationship selling, the customers don’t feel cheated and exploited and the salespeople don’t feel the pressure to push products, the whole act of selling and purchasing becomes a smooth and enjoyable experience for both.
Sales people who focus on building relationships enjoy customer retention and loyalty as a result. What can the organization and it sales people do to build relationship with customers? Building relationship with customer requires the sales people to be ethical, considerate and genuinely helpful individuals . Key to building relationships is to create trust in the customers mind towards the salesperson and the organisation. This is a process that the organisation has to consciously develop in their salespeople to carryout.
The basic skills of such as listening, thorough product knowledge, ability to relate the customers’ problems with the products and services that the seller offer, asking open ended questions to understand the customers buying motives, focusing on benefits rather than technical features will make the customer feel at ease with the salesperson. However, the significant part of building relationship comes after the sale is done. The organisation has to keeping their promises made to customer in the process of selling such as prompt delivery, physical attributes, quantity and quality.
The implementation of the product or service has to be well followed up by the salespeople and the organisation. Once the customer begins to use the product or service, the organisation should make steps to take the feedback of the customer on a continuous basis in order to make sure that the product or service has been effective in solving the customer’s original problems. This process would also keep the salespeople in touch with the customer and they can look for more sales opportunities.
Organisation can help the sales people in this process by equipping them with exhaustive product knowledge, information on market segmentation, competition and their attributes and a standard procedure to receive and process customer communication. Discuss the 5 bases of power that affect leadership? Two psychologists, French and Raven classified power into Five bases; Legitimate, Reward, Coercive, Referent, and Expert. Within these five bases the first three i. e, Legitimate, Reward and Coercive, can be categorised as position power bases because they are rooted in one’s formal authority or position in a group or an organisation.
Referent, and Expert power bases are considered to emanate from one’s personal or idiosyncratic aspects of influencing people. Legitimate power comes from the position and status one acquires within an organisation. This power is used by a leader to direct his team members towards achieving the goals and visions of the organisation. Legitimate power gives the leader the authority to assign tasks and work to the followers. Legitimate power is very common in every organisation because it is required to exercise control over the work force.
It can also be noted that in a hierarchical organisation, the top management has the strongest legitimate power, which they distribute to certain individuals below them so that they can accomplish their goal effectively by using this power to make people work. Reward Power, is closely linked to legitimate power as this is also a positional power that comes from the ability of the leader to mobilise his followers by rewarding them. The effectiveness of reward power depends on the kind of rewards the leader can offer and the desire of the followers to have them.
Contemporary rewards used in organisations are salary hikes, performance linked incentives, recognition, praise and awards, easier work environments, tour packages, gift vouchers etc. Rewards are an excellent motivational tool in organisations especially in sales and marketing department that drives people to go the extra mile in achieving their goals. Coercive power is the exact opposite of reward power in terms of its implementation. A leader uses coercive methods like threats of punishment, job transfers to undesirable environments, demotions, salary cuts and so on to get the work done by his group.
Punishment is also a motivation for workforces to accomplish their tasks within a timeframe, though its use is becoming less frequent because of the negative effects it will create on the employees of an organisation or the members of the group. Usually managers in an organisation is vested with all the above three position based powers. Of these the reward power is found to be the most effective and more leaders are considered to adapt it when compared with the other two. Referent Power originates from the personality of the leader with attributes like charisma and other traits that appeal to the followers.
Referent power of a leader can get stronger by the association of the leader with other powerful leaders, which may be real or perceived by the followers. They inspire people by showing them a strong vision and conviction to achieve it combined with complete confidence in the group’s ability to attain the vision. Expert Power is a power that falls in to the personal category. This power is created from the knowledge, talents and other special abilities and capacities demonstrated by the leader, which makes the leader admired by the followers. This power could be formed by education and experience.
In this age of technology and knowledge based organisations, this sort of power is very common and is likely to be one of the dominating powers in the future. Usually the expert leaders also get appointed in a position of power in an organisation that also vests in them a combination of legitimate, reward and coercive powers. How would you define sales ethics and why is this topic receiving so much of attention today? Today, it is the age of information overload where consumers are bombarded with promotional literature all around them on line and off line.
Much of the claims of these advertisements tend to be untrue. It may not be a blatant lie, but marketers use a lot of evolving techniques to get around to make their products look the very best in the world to the unassuming consumer. The most disturbing thing about it is that the standards are being lowered in this matter because people are getting exposed to these techniques and they are used to the exaggerations and double-speak. So the initiated tend to ignore this while the innocents fall prey to these kind of sales methods.
Sales people sometimes resort to unethical methods to convince a customer to close a sale. Mostly they do so in order to achieve their, often unattainable, sales targets. Their unethical methods range from seemingly harmless lying, in order to get appointments and fake-surveys to introduce products over telephone and internet, to highly dangerous methods like exaggerating about the features of the product, about impending price hikes, durability and other quality attributes of the product or services, hiding the drawbacks and demerits of its fitness for the customers need.
They over promise freebies and delivery schedules, misrepresent the product usage, cheat on the model or brand names or codes of machinery and products, levy hidden charges from the customer after the sale is completed, release confidential information of one customer to another prospective customer in the hope of obliging him into purchasing or for direct monetary benefits etc. Due to widespread complaints from the public, the governments of most developed countries have set up regulatory authorities and code of ethics.
The factors that sometimes marketers resort to unethical practices is unreasonable pressure from the top management to attain impossible targets in revenue, profits, cost-cutting, market share etc. Moreover, individual salespersons may also indulge in unethical selling due to personal compulsions such as material desires, frustration in bad performance etc. In her article Ethics of Selling, Nancy Godson points out “Such practices handicap potential long term client relationships and do nothing to dismantle the negative opinion that the sales profession is inherently unethical”
Its imperative now, that top management needs to take responsibility for this menace and take all steps to avoid the practice of unethical selling. This can be done by spreading awareness within the sales force and the marketing department as a whole about the dangers of getting involved in such practices and creating a code of ethics within the organisation that the individuals can refer to when they are confronted with a decision in this respect.
Relying on the integrity of the individuals may prove to be a dangerous ploy for organizations looking for longterm customer relationships, customer retention and loyalty. With the advent of franchisee model expansions rampant in almost all segments of business it becomes a tougher responsibility for the organization to see that proper training and awareness programs are conducted not only within all the levels of that organization but also in the employees of their associates and franchisee who actually represent their brand to the customer.
If Management emphasizes their sales staff to focus on building relationships in order to get long term loyal customers rather than getting short term sales for immediate revenue, and introducing a reward system for sales people who successfully achieves this, will go a long way in curbing the occurrences of unethical selling. Describe salary, commission and combination pay plan in terms of their advantages and disadvanatages? Salary pay plan is one in which an employee earns a fixed amount of money as compensation.
This is the major pay plan most governmental and non profit organizations. In private sector there are departments like accounting, administration, client service, human resource, training etc that work mostly under this plan. The employees’ advantages , in this system are that 1. The employees will get an assured amount periodically, with which they can plan their life systematically and make budgetary plans accordingly. 2. The employees feel more secured 3. Low attrition rates among workforce – with these advantages they will think twice before looking for other opportunities.
4. Salaries are simple for accounting and operational comfort 5. Gives the top management a sense of control over their sales staff. The disadvantages of the salary pay plan for the employees is that no matter how efficient they are in their job, they will get only the fixed pay. So the growth opportunities and earning potential are very limited. Since hard work is not rewarded in this system the employees usually lack enthusiasm and motivation to push their work. Evidently, a pure salary pay plan is not suitable for sales people.
Commission plan is one method of rewarding employees that involve paying a percentage of sales revenue or profits on the sales completed by that particular sales person. This is highly suited for sales people and many organizations keep their sales team on this type of pay. The commission rate could be fixed or progressive with increasing slabs of sales. The advantages are that the sales people will be motivated to achieve their goals in order to get higher commissions. This is risk free method for organizations in managing the employee turnover of their sales people.
The demerits of a pure commission based pay is that there will be no control over the staff because the company is not paying for their time, they are only paying for the sale. Also, the disbursement is more complicated than salaries and could result in a lot of confusions and confrontations arising out of suspicions that the orgnisations may not paying them their due. From the employees point of view, there is no security or assured amount to fall back on in lean months. Their income range dramatically from month to month which keeps them guessing about their plans of purchases, repayment of loans, and generally their domestic expenses.
The sales people will only focus on sales activities and they will not be interested in following through to help the customer and take feedback. A combination plan is where the sales people are offered a fixed salary and a target with an additional commission on achieving the target. This is the best of both worlds as there are a few definite advantages such as 1. The sales people feel secure with a safety net to fall back on in low-sale periods – the salary component has to be sizeable for this to happen 2.
Sales people retention will be high because of the safetynet. 3. The management has more control over the sales staff and can assign them on non-sales activities like enquiry generation, manning exhibitions and promotional activities, or specific service activities 4. The good performers can earn money and will motivate the entire team to achieve their goals. The demerits of this combination pay system are that the payment calculations gets more cumbersome than commission only system and this can result in misunderstandings.
The combination plan also increases the expenses of the sales team and could make the company go for unrealistic targets to offset the cost. BIBLIOGRAPHY SmallBusinessBible. org How to become a good sales person http://www. smallbusinessbible. org/how_become_goodsalesperson. html, Steven W. Brown, Sales training must emphasize building relationships; trust is key to selling. , Friday, October 1 1993, American Salesman, p. 1, http://www. allbusiness. com/sales/selling-techniques/401782-1. html p. 1-2 John W. English, How to Organise & Operate a Small Business in Australia, Allen & Unwin, 2006, p. 250