Sales Force Management

Sales Force Management refers to the strategic process of overseeing a company's sales force to maximize sales effectiveness and efficiency. This encompasses a variety of tasks including planning sales objectives, recruiting and training personnel, motivating the sales team, and monitoring performance. Sales managers must balance recruitment and retention of skilled salespeople with the need to cultivate a robust sales strategy tailored to target market demographics.

Two primary control systems guide sales force management: outcome-based and behavior-based control systems. Outcome-based systems focus on sales results, enabling flexibility in execution but potentially leading to unethical practices if not monitored. Conversely, behavior-based systems emphasize the activities and processes leading to sales, requiring more oversight but fostering adherence to organizational standards and ethics.

Understanding these dynamics is crucial for sales managers to effectively motivate their teams, address ethical concerns, and maintain a balance between achieving sales goals and ensuring long-term customer relationships. Overall, the effective management of a sales force is integral to a company's success, requiring a nuanced approach to leadership, motivation, and ethical oversight.

Published in: 2021

By: Wienclaw, Ruth A.

Subject Terms

Sales Force Management

Abstract

Sales force management is the process of efficiently and effectively making sales through the planning, coordination, and supervision of others. Effective sales management involves a wide range of activities, including planning; organizing, recruiting, and selecting sales personnel; enabling and motivating the sales force to sell (e.g., training, print materials or samples); supervising and coordinating sales efforts (e.g., assigning territories or routes); and controlling and monitoring the sales force. Two types of control systems are typically used in sales force management: outcome-based and behavior-based. Both approaches have advantages and disadvantages due to the inherent nature of the sales job. Ethics is becoming an increasing concern in many sales departments. However, the treatment of ethical violations is not always consistent across high- and low-performing sales personnel.

Overview

To the skilled salesperson, sales jobs can offer the potential to earn more than salaried jobs. On the other hand, sales jobs do not offer the security of a salaried job and, therefore, do not appeal to everyone. From a management point-of-view, the nature of sales jobs can make managing a sales force a different task in some ways than managing other groups of professionals in the workplace. In addition, the fact that much of a salesperson's work may be performed outside the office where she or he cannot be directly observed, makes the task of managing a sales force even more difficult.

Sales Force Management. In general, management can be defined as the process of efficiently and effectively accomplishing work through the coordination and supervision of others. Sales management is the process of efficiently and effectively making sales through the planning, coordination, and supervision of others. Effective sales management involves much more than performing administrative tasks to coordinate the activities of the sales force. To be effective, the management of a sales force must encompass a wide range of activities, including planning; organizing, recruiting, and selecting sales personnel; enabling and motivating the sales force to sell (e.g., training, print materials or samples); supervising and coordinating sales efforts (e.g., assigning territories or routes); and controlling and monitoring the sales force.

Planning. In order for a sales force to be effective, the objectives and activities of the sales function must be planned in such a way to make the best use possible of both the sales force and the marketing budget necessary to sell the organization's goods and services to potential customers. Activities involved in management planning for a sales force include understanding the qualifications, abilities, and experience of the sales force and how best to use the personnel and other resources of the sales function in the organization. The sales manager also needs to understand the demographics of the target market as well as its needs and motivations in order to better prepare the sales force for success. By better understanding the capabilities of the sales force and the needs of the prospective customers, the sales manager can better develop a plan that will leverage the strengths of the sales force and enable each individual member to reach his or her optimal sales potential. The launch of new product or significantly upgraded product may require a reassessment of strategy, including further training, adjustments to compensation, and potentially a change in sales force personnel. In addition to developing a sales plan to best meet the needs of the customers, the sales manager also needs to organize the sales force to best match the requirements of customers and potential customers on an ongoing basis to improve the effectiveness and efficiency of the sales force.

Training & Development. Management of an effective sales force is predicated on the training and development of sales personnel. To do this, one must first articulate what it is that the sales force needs to accomplish. This task involves developing a job description that specifies the duties and tasks related to a job. Job descriptions may also specify the knowledge, skills, and abilities necessary to do the job as well as the performance standards that differentiate acceptable from unacceptable performance. A well-developed job description will not only give the sales manager criteria against which to judge the performance of the individuals in the sales force, but will also give him or her a guide to selecting the best candidates for the sales force. To optimize the effectiveness of the sales force, the manager—typically in conjunction with the human resources function of the organization—is responsible for the training and development of sales personnel. Even if the sales force comprises experienced sales personnel who have worked in other organizations or with other products, sales training needs to include specifics about the way that sales are conducted in the current sales department as well as training on the details of the products or services being sold so that the sales force can accurately and adequately answer the questions of potential customers. Similarly, the sales force needs to receive updated training on any changes in organizational policy that affect them and on new information about the organization's products or services so that they can better do their jobs.

Performance Motivation. Just knowing how to do the sales job and knowing the product or service being sold are not enough to create an effective sales force, however. The sales force must also be motivated to perform. For this reason, many sales departments pay their sales personnel at least in part based on commission (a set fee or percentage of every sale made). Such financial incentives are one of the most common motivators for sales jobs. Sales commissions tend to be an effective motivator of superior sales performance because they tie rewards directly to performance on the job. However, financial incentives are not the only way to motivate sales personnel to perform. Other ways to motivate the sales staff are through connecting job performance with various perquisites such as a company car for making sales calls or trips or paid vacations for being a top seller. Other motivators include job security and status (such as through a promotion, job title, or other award or recognition).

Monitoring. Another important activity in sales force management is controlling the sales function and monitoring the activities of the sales staff to make sure that they are effective and successful. To do this, management must set performance objectives for the sales force as well as ways to help enable the sales force to meet those objectives. Some ways to do this include setting standards for behavior (e.g., number of sales calls required during a given period of time), implementing ways to collect data on how well the standards are being met and making sure that the data are collected, analyzing the data to determine where objectives are not being met and why, and determining a plan of action for correcting these situations.

Sales Force Behavior Moderation. Determining the best way to control the behavior of members of a sales force is a topic that has been debated in the literature for years. Two general approaches to sales force control systems—or the procedures by which an organization observes, guides, appraises, and rewards its employees—have been posited.

Outcome-Based Sales Force Control. The approach of outcome-based sales force control systems focuses on the final outcomes of the sales process (e.g., whether or not a sale was made, total revenues earned by a salesperson in a given period of time). Whether or not a salesperson has met outcome-based standards tends to be both objective and clear: They either made the assigned sales quota for a time period or did not. In this way, outcome-based control systems for sales personnel are very similar to management objectives. Criteria of success are set ahead of time, and the employee knows the specifics of what constitutes acceptable behavior. As a result, outcome-based control systems for sales personnel tend to require relatively little monitoring or direction by management. Further, because they are results-oriented, outcome-based control systems allow sales personnel latitude in how they carry out their job and enable them to modify their behavior to fit their personality or the expectations or needs of the customer in order to achieve the desired results rather than following a strict pre-approved procedure for dealing with a customer.

Outcome-based control systems have been the traditional system of choice for most sales force managers. Such systems are often favored because of the relative availability of criteria against which performance can be measured such as number of sales made or dollar volume earned within a given performance assessment period. Since sales personnel tend to spend a majority of their time out of the office (and often on the road), such objective measures of performance are sometimes the only way to gather data about how well a sales person is performing. Further, there is not only one way to make an ethical sale. Different potential customers need to be treated in different ways and salespersons are typically well-advised to leverage their own personality traits, skills, and experience in making a sale rather than blindly following a specified procedure. However, outcome-based control systems are not without their disadvantages as well. Because sales jobs tend to be performed in isolation by their very nature, it is easy for sales personnel to actually harm the organization while still making a sale. For example, to make a quick or easy sale, a salesperson might skimp on customer service and follow-up in order to make another sale. In most situations, this will result in a customer who is likely to think twice before purchasing from that salesperson—or even that organization—again. Similarly, in order for their sales figures to look good, salespersons might focus on selling more items with a smaller price tag or on items or services that have been proven easier to sell. Although this might help the salesperson's performance record, it does not help the organization build its business.

Behavior-Based Control System. Although outcome-based control systems may seem at first to be an objective way to assess the performance of a sales person, they do not take into account a number of factors. Particularly on big ticket items, sales often occur over a period of time. The salesperson may need to establish a relationship with the customer, assess the customer's needs, defend his/her product against the product of competitors, persuade the customer of the relative value of his/her product, and wait while the customer makes a decision according to the customer's time table, not the salesperson's. Such activities take time. So, in theory, there may be performance assessment periods during which a salesperson may not have made any sales but is well on his/her way to making a significant sale. On paper, however, this would look no different from the outcomes of salesperson who had not interacted with a customer at all under an outcome-based control system.

Because of such aspects of outcome-based control systems, some people argue that a behavior-based control system is more appropriate for use with sales forces. These systems focus more on the behavior of the sales person rather than his/her final sales. However, behavior-based control systems require significantly more monitoring of both the activities and the results of the sales force's efforts. Management employing a behavior-based control system for their sales personnel will also need to give the sales personnel higher levels of direction and intervene more frequently in the sales force's activities than do managers using an outcome-based system. Further, behavior-based control systems tend to be not only more subjective than outcome-based control systems, but more complex as well. Behavior-based regulatory procedures are more reliant than outcome-based control systems on the knowledge, skills, and abilities that the salesperson brings to the job (e.g., aptitudes, personality traits, general or specific product knowledge), the activities of the sales force (e.g., number of calls made), and the sales strategies employed in trying to make a sale (Anderson & Oliver, 1987). These are the types of criteria that are used in behavior-based control systems.

Behavior-based control systems overcome a number of the disadvantages associated with outcome-based control systems. First, behavior-based control systems allow the sales manager more control than do outcome-based systems. In behavior-based systems, the manager can better ensure that the sales force is adhering to the sales plan and to the policies and procedures of the department. Since rewards in behavior-based systems are tied to behavior rather than outcomes, sales personnel will be more motivated to follow the policies and procedures even if they are not necessarily convinced of their validity. However, behavior-based control systems also tend to be complex and subjective. When this is the case, the control system is not fair and can easily result in dissatisfied workers.

Applications

Unethical Sales Practices. Most people have had experience with an unethical sales person. Particularly if one is on commission or working under an outcome-based control system, it is too easy to stretch the truth or otherwise prevaricate in an attempt to make a sale by leading the buyer to believe something about a product or service that is not true. As a result, many people have experienced purchasing such things as a used book online that is not in "like new" condition, but is broken and underlined, or a new kitchen appliance whose warranty was not what was stated by the salesperson. As individual customers who have been conned by unethical sales behavior, people may think that they are alone in this experience and that the business that employs the unethical individual does not care about their behavior as long as the sale is made. The unethical behavior of sales personnel can quickly reflect back on the business that employs them, potentially doing serious damage to both the reputation and revenues of the organization as a result. Therefore, it is important that the sales management be aware of the possibility of such behavior and discourage it from happening if the organization is to build brand loyalty and repeated sales.

However, not every sales manager deals with unethical behavior in the same way. In fact, under outcome-based control systems, it can be difficult to determine whether or not a salesperson was acting in an unethical manner if the "bottom line" is the number of sales made or the amount of revenue earned for the business. Increasingly, organizations are concerned with the development of marketing and sales departments that encourage ethical behavior and discourage unethical behavior (Hunt & Vasquez-Parraga, 1993). However, research has found that how a sales manager actually disciplines a member of the sales force for unethical behavior depends on a number of factors rather than only on the inherent rightness or wrongness of the action. For example, DeConinck (1992) found that managers are more likely to verbally warn top performers for behavior that is deemed unethical while giving more formal, written warnings to or even recommending the firing of poor performers. However, the more severe consequences for poor performers caught in an unethical act may not actually reflect the severity of the unethical action, but may be an excuse for getting rid of a poor performer.

In a 2016 study of a sample of over three hundred salespeople nationwide, it was discovered that having ethical leaders in charge of a sales force can have a direct impact on the ethical environment of the workplace and cultivate supervisory trust that can then indirectly affect sales employees' moral judgment. Therefore, it is important for sales force managers to understand that their code of ethics is typically internalized by their employees, and ensuring that managers remain ethically responsible can have a positive impact on how their employees make sales and interact with customers (DeConinck & Moss, 2016).

Conclusion

Although the management of a sales force has much in common with management activities within other functional departments, the very nature of the sales function does make it different. On the one hand, sales jobs lend themselves easily to the collection of hard performance data that can be used to motivate and control the sales force. However, since most sales personnel perform most of their work outside the office, it is difficult for management to adequately and accurately evaluate their performance in other ways. To best motivate sales personnel to perform in accordance with the standards of the organization and the department, rewards need to be tied to performance not only for objective criteria such as volume of sales, but for other desired behaviors as well.

Terms & Concepts

Brand Loyalty: The reluctance of a buyer to switch to another brand of product or service because s/he is familiar and comfortable with the brand s/he is currently using or has used in the past.

Commission: A set fee or percentage of the sale that is given to a sales representative for convincing a customer to make a purchase.

Control System: The procedures by which an organization observes, guides, appraises, and rewards its employees.

Criterion: A dependent or predicted measure that is used to judge the effectiveness of persons, organizations, treatments, or predictors. The ultimate criterion measures effectiveness after all the data are in. Intermediate criteria estimate this value earlier in the process. Immediate criteria estimate this value based on current values.

Ethics: In philosophy, ethics refers to the study of the content of moral judgments (i.e., the difference between right and wrong) and the nature of these judgments (i.e., whether the judgments are subjective or objective).

Job Description: A document that lists the duties and tasks related to a job. Job descriptions may also specify the knowledge, skills, and abilities necessary to do the job as well as the performance standards that differentiate acceptable from unacceptable performance.

Management: The process of efficiently and effectively accomplishing work through the coordination and supervision of others.

Management by Objectives (MBO): An approach to performance appraisal in which the employee and his or her manager jointly set performance objectives for the coming appraisal period and then review the progress made toward accomplishing these at predefined times. The employee's performance is evaluated in terms of how well s/he met the objectives previously determined.

Performance Assessment: The process of evaluating an employee's work performance and providing feedback on how well they are doing (typically against some standard of performance for that job).

Perquisites ("perks"): Something given to the employee in return for work over and above regular pay or compensation. Perks may include such things as health insurance, a company car, or a private office.

Personal Selling: The process of communicating with the customer on a one-to-one basis with the intention of persuading them to purchase a product or service. Personal selling may include developing a relationship with the customer, collecting and analyzing data formally or informally to determine the customer's needs, determining the best match between the customer's needs and the business's products or services, and effectively communicating this information in an attempt to persuade the customer to make a purchase.

Persuasion: The process of convincing someone to take a particular course of action or hold a particular point of view by argument, reasoning, or entreaty.

Sales Management: The process of efficiently and effectively making sales through the planning, coordination, and supervision of others. The activities of sales management include recruiting and selecting sales personnel, enabling the sales force to sell (e.g., training, print materials or samples), supervising and coordinating sales efforts (e.g., assigning territories or routes), and other motivating and human resource activities.

Target Market: The people or businesses to whom the entrepreneur wishes to sell goods or services.

Bibliography

Anderson, E. & Oliver, R. L. (1987). Perspectives on behavior-based versus outcome-based salesforce control systems. Journal of Marketing, 51, 76–88. Retrieved February 17, 2009, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=4996249&site=ehost-live

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Churchill, G. A. Jr., Ford, N. M., & Walker, O. C. Jr. (1993). Sales force management (4th ed.). Homewood, IL: Richard D. Irwin, Inc.

DeConinck, J. B. (1992). How sales managers control unethical sales force behavior. Journal of Business Ethics, 11, 789–798. Retrieved February 17, 2009, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=5404109&site=ehost-live

DeConinck, J., & Moss, H. (2016). The relationship among ethical leadership, ethical climate, supervisory trust, and moral judgment. Allied Academies International Conference: Proceedings of the Academy of Marketing Studies (AMS), 21(2), 1–3. Retrieved March 1, 2018 from EBSCO Online Database Business Source Ultimate. http://search.ebscohost.com/login.aspx?direct=true&db=bsu&AN=120014842&site=ehost-live&scope=site

Hunt, S. D. & Vasquez-Parraga, A. Z. (1993). Organizational consequences, marketing ethics, and salesforce supervision. Journal of Marketing Research, 30, 78–90. Retrieved February 17, 2009, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=9511203701&site=ehost-live

Myette, M., & Lambert, B. (2010). Making the shift. T+D, 64, 32–35. Retrieved October 31, 2013, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=a9h&AN=51189730&site=ehost-live

Rukuižiene, R. (2011). Strategic sales management mix for a launched new product. Proceedings of the International Scientific Conference: Rural Development, 5, 229–234. Retrieved October 31, 2013, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=a9h&AN=70147277&site=ehost-live

Smith, B., Larsen, T., & Rosenbloom, B. (2009). Understanding cultural frames in the multicultural sales organization: Prospects and problems for the sales manager. Journal of Transnational Management, 14, 277–291. Retrieved October 31, 2013, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=a9h&AN=46838021&site=ehost-live

Strafford, J. & Grant, C. (1993). Effective sales management (2nd ed.). Oxford: Butterworth-Heinemann Ltd.

Sales Force Management

On this Page

Subject Terms

Sales Force Management

Abstract

Overview

Applications

Conclusion

Terms & Concepts

Bibliography

Suggested Reading