Sales Force Law and Legal Definition
A company's sales force consists of its staff of salespeople. The role of the sales force depends to a large extent on whether a company is selling directly to consumers or to other businesses. In consumer sales, the sales force is typically concerned simply with taking and closing orders. These salespeople are not responsible for creating demand for the product, since, theoretically, demand for the product has already been created by marketing efforts such as advertising campaigns and promotional activities. Salespeople may provide the consumer with some product information, but individuals involved in consumer sales are often not concerned with maintaining long-term customer relationships. Examples of consumer sales forces include automobile salespersons and the sales staffs found in a variety of retail stores.
The sales force takes on a completely different role in business-to-business sales. Industrial sales forces, for example, may be required to perform a variety of functions. These include prospecting for new customers and qualifying leads, explaining who the company is and what its products can do, closing orders, negotiating prices, servicing accounts, gathering competitive and market information, and allocating products during times of shortages.
Within the business-to-business market, a distinction can be made between selling to retailers, industrial sales, and other types of business-to-business sales and marketing. The concerns and activities of the sales force tend to vary in each type of business market. What they have in common, however, is the desire of the sales force to establish a long-term relationship with each of its customers and to provide service in a variety of ways.
In selling to retailers, for example, the sales force is not concerned with creating demand. Since consumer demand is more a function of advertising and promotion, the sales force is more concerned with obtaining shelf space in the retailer's store. The sales force may also attempt to obtain more promotion support from the retailer. The sales force relies on sophisticated marketing data to make a convincing presentation to the retailer in order to achieve its sales and marketing objectives.
The largest sales forces are involved in industrial selling. An average industrial field sales force ranges in size from 20 to 60 people and is responsible for selling throughout the United States. The sales force may be organized around traditional geographic territories or around specific customers, markets, and products. An effective sales force consists of individuals who can relate well to decision makers and help them solve their problems. A sales manager or supervisor typically provides the sales force with guidance and discipline. Within the company the sales force may receive support in the form of specialized training, technical backup, inside sales staff, and product literature. Direct mail and other types of marketing efforts can be employed to provide the sales force with qualified leads.
In recent years, costs associated with making single business-to-business industrial sales calls have risen dramatically. As a consequence, many businesses have redoubled their efforts to make sure that they get the most possible efficiency out of their sales force (by expanding their territories, increasing their duties, etc.).
Sales managers and supervisors can measure the efficiency of their sales force using several criteria. These include the average number of sales calls per salesperson per day, the average sales-call time per contact, the average revenue and cost per sales call, the entertainment cost per sales call, and the percentage of orders per 100 sales calls. The sales force can also be evaluated in terms of how many new customers were acquired and how many customers were lost during a specific period. The expense of a sales-force can be measured by monitoring the sales-force-to-sales ratio, or sales force cost as a percentage of total sales.
Using such criteria to evaluate the effectiveness of the sales force allows companies to make adjustments to improve its efficiency. If the sales force is calling on customers too often, for example, it may be possible to reduce the size of the sales force. If the sales force is servicing customers as well as selling to them, it may be possible to shift the service function to lower-paid personnel.
In industrial and other business-to-business sales, the sales force represents a key link between the manufacturer and the buyer. The sales force is often involved in selling technical applications and must work with several different contacts within a customer's organization. Industrial salespeople tend, on average, to be better educated than their consumer counterparts, and to be better paid. However, their cost as a percentage of sales is lower than in consumer sales, because industrial and business-to-business sales generally involve higher-ticket items or a larger volume of goods and services.
The sales force may be compensated in one of three ways: straight salary, straight commission, or a combination of salary plus commission. The majority of today's businesses utilize a combination of salary plus commission to compensate their sales forces, and fewer companies based their sales force compensation on straight commission. It appears that, as a percentage of all sales forces, the use of straight salaries remains constant. Whatever type of compensation system is used for the sales force, the important consideration is that the compensation adequately motivates the sales force to perform its best.
SEE ALSO Business-to-Consumer; Business-to-Business; Manufacturers' Agents; Personal Selling; Sales Commissions
BIBLIOGRAPHY
Boone, Louis E., and David L. Kurtz. Contemporary Marketing 2005. Thomson South-Western, 2005.
Calvin, Robert J. Sales Management. McGraw-Hill, 2004.
Cichelli, David J. Compensating the Sales Force: A Practical Guide to Designing Winning Sales Compensation Plans." McGraw-Hill, 2004.
Cohon, Charles M. The Sales Force. Manufacturers and Agents National Education Foundation, 2004.
Gitomer, Jeffrey. The Sales Bible: The Ultimate Sales Resource. John Wiley & Sons, 2003.
Hillstrom, Northern Lights
updated by Magee, ECDI
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