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13 Personal selling tools.

There are a number of tools that can be developed and used by salespeople to improve their performance. These tools increase the efficiency and effectiveness of sales presentations. This chapter discusses two such tools: time management and negotiating skills. In addition, salespeople should conduct business in an ethical manner. The last section in this chapter discusses ethical issues faced by salespeople in an attempt to form some basic guidelines.

Time Management

Time is a critical resource for salespeople because it is limited and must be managed properly to ensure efficient and effective performance. Figure 13-1 displays a general breakdown of the normal activities in a salesperson's day and the time spent on each activity.

As you can see, only a small percentage of time is actually spent selling. Therefore, in an attempt to maximize the time when one is engaged in selling, it is important to understand the concept of time management.

Time management can be thought of as a process, or a cycle, as shown in Figure 13-2. First, salespeople set their goals in accordance with the expectations of the firm. Second, once the goals are set, salespeople must develop sales strategies and allocate resources. The third stage involves the actual implementation of the strategies. Finally, it is necessary to evaluate or measure performance based on the goals that are initially set.

Setting Sales Goals

The first step in the time-management process is to set sales goals. A salesperson's goals will be a direct extension of his or her overall lifestyle and career goals. Therefore, it is important to understand the personal side of the individual, as well as his or her career plans. For example, an individual who has a family may not want to travel overnight as often as someone who is single, or the individual might be willing to forego additional income in return for more time to spend with his or her family.

[FIGURE 13-2 OMITTED]

Basically, sales goals can be placed into three categories: conversion, sales achievement, and sales activities. Conversion goals deal with the salesperson's ability to obtain commitment in the process of making sales calls to new prospects and existing accounts. Sales achievement or performance goals are based on actual volume or revenue that the salesperson acquires. Finally, sales activities goals are concerned with the number and mix of sales calls, and the ability to schedule actual sales presentations. These goals should be clear and concise, quantifiable, and specify a time frame. This will make it much easier to evaluate and measure performance.

Developing Sales Strategies

There is a rule that has been applied in marketing for some time, called the 80/20 rule. This proposition holds that 80 percent of profitable business will be generated by 20 percent of the customers. This rule was found to hold true for many tangible products, but it would seem to apply to services as well. In particular, hospitality firms segment customers based on their frequency of use with the firm's frequent flier, frequent guest, and frequent diner programs. Those who purchase more, receive more benefits and attention. There is no difference when it comes to group business sales.

Not all prospects, guests, or meeting planners should be treated equally. Rather, special attention should be given to those who produce the largest share of the revenue and profits or who have the potential to do so. The groups that make up this 20 percent are termed key accounts. They deserve special attention and extra-personalized selling efforts.

Sales and marketing departments should keep a close watch on the level of business provided by each account. Trends should be studied to determine which accounts are growing and which are declining. An analysis of each account should be conducted periodically to determine the total revenue and contribution margin for each account. Based on this analysis, accounts can be classified as shown in Figure 13-3.

Those accounts with the highest profit margins and best potential for increased business must be given extra attention, while those that are marginal should not consume too much of sales managers' time and effort. Keep in mind that resources are limited and that they should be directed toward the accounts with the most profit potential.

Desirable Accounts. These are the accounts with high profit margins and good potential for increased business. Desirable accounts should receive a high level of attention in the form of sales calls and account maintenance because they are the organization's most attractive accounts. These accounts represent a large portion of the hospitality firm's source of funds. Therefore, it is important that the firm allocate an adequate level of resources to continue developing these accounts.

Developed Accounts. These are the accounts with high profit margins, but not high potential for increased business. Developed accounts provide a steady stream of cash flow, but there is not much potential for increasing the level of cash flow. Currently, the firm's strategy should be to allocate the resources necessary to maintain these accounts in order to ensure future business. However, it is important that salespeople are careful not to spend an excessive amount of their time on these accounts.

Undeveloped Accounts. These are the accounts with low profit margins and good potential for increased business. The firm currently has a weak position with these accounts, but there is an opportunity to improve this position. The strategy should be to allocate a fairly large amount of resources to develop these accounts, even though they don't provide much cash flow at present.

Undesirable Accounts. These are the accounts with low profit margins and little potential for increased business. Currently, the firm has a weak position and the accounts offer little opportunity for future cash flow. Therefore, the strategy should be to allocate a minimal amount of resources and to give consideration to eliminating the business all together. Another alternative is to shift the attention from high effort in the form of personal sales calls toward lower effort in the form of telephone calls and direct mail.

The grid helps salespeople classify their existing accounts based on the hospitality firm's competitive position with an account and the account's future sales potential. All firms have some limitations in terms of resources, including the amount of time salespeople have to call on existing accounts and develop new business. It is important that salespeople manage their time so that they can maintain existing accounts, while at the same time, continually develop new business to increase the sales base and compensate for accounts that are lost or decreasing in revenue.

Implementing Sales Strategies

Once the sales strategies have been developed, the next step is to implement them. At this stage, it is important to plan the activities that will be pursued. First, the salesperson should make a list of the activities to be performed. Second, the salesperson should prioritize the activities based on their importance in achieving the sales goals. Third, the salesperson should estimate the amount of time each activity will consume. Fourth, the salesperson should develop a time schedule that can be followed in performing the activities. Finally, the salesperson should monitor any variances in the budgeted time and the actual time that it takes to perform the activities. This will allow the salesperson to make adjustments along the way.

Following is a list of potential "time traps" that result in wasting a salesperson's time, which in turn leads to inefficiency and ineffectiveness.

* Calling on unqualified or unprofitable prospects. It is important for salespeople to determine the ability and willingness of prospects to buy their products and services. Also, the accounts must be profitable enough to justify the use of firm resources. It is possible that accounts can be profitable without meeting minimum levels for firm performance. These problems can be avoided by properly qualifying prospects before allocating any significant time or resources to making sales calls.

* Performing tasks that could be delegated. Many firms benefit from specialization of labor, and salespeople are best utilized for selling. Other duties can be delegated to other members in the sales department. Most hotel sales departments have sales assistants and other support personnel.

* Insufficiently planning each day's activities. Each afternoon, salespeople should make a schedule for the next day. Travel plans should be arranged in an attempt to minimize the time between sales calls. Also, tasks should be prioritized and planned around necessary time constraints.

* Making poor use of time between sales calls. Modern technology has provided mobile equipment, such as telephones and laptops that allows salespeople to perform traditional office tasks while away from the office.

* Making too many cold calls. Once again, it is important for salespeople to balance their time between existing accounts and new business. Although some degree of cold calling is required, when attempting to develop new business, the potential for success is improved when salespeople take the time to qualify accounts and set up appointments rather than relying primarily on cold calls.

* Being disorganized. Salespeople should keep organized records and use an efficient filing system because of a great deal of time can be wasted trying to find documents. Electronic organizers and computers are helpful, but there is still a need for actual paper copies of contracts and memos.

* Taking long lunches and too many coffee breaks. It is easy to get sidetracked when socializing with fellow workers and friends. Leaving the office or walking away from one's desk can result in significant periods of down time. A certain level of break time is beneficial; however, at some point it becomes counterproductive.

* Spending too much time entertaining prospects and customers. It is important to build relationships and give customers personal attention. However, it is easy to get carried away and to be excessive, especially when it comes to entertaining. This does not refer just to the recreational act of entertaining, it also refers to giving property tours and speaking on the telephone. Salespeople have a finite number of working hours and they need to manage those hours properly. The more time spent with any one customer or prospect, the less time left for others.

* Procrastinating on major projects or difficult tasks. Salespeople can reduce large undertakings into smaller, manageable tasks that can be readily accomplished. It is easy to "spin your wheels" when you agonize over a complicated task involving a large time commitment.

* Conducting unnecessary meetings, visits, and telephone calls. Once again, there is only so much time in the day and it must be used effectively. Meetings should not be scheduled until everyone is fully prepared, and visits and telephone calls should have a specific purpose with a desired outcome.

* Trying to do too many things at one time. It is often better to concentrate on one task until it is finished. Taking calls during a meeting or while preparing a contract can lead to delays and other problems. Under some circumstances, it may be necessary to eliminate possible interruptions.

Measuring Performance

After sales goals are set, strategies are developed, and resources are allocated, it is necessary to measure performance to determine if the time-management process is effective. It is important to look at various measures of performance to correctly assess the effectiveness of the process. The performance measures should be consistent with the sales goals.

Conversion Rate. One type of performance measure is to look at the number of accounts that are sold in relation to the number of sales calls that are made. This measure can be dissected further by customer type (corporate, association), size of account (number of room nights, total revenue), and/or level of services (guest rooms, meeting rooms, and food and beverage).

Sales Achievement. One way to measure the salesperson's performance is in relation to his or her goals. In other words, what are the actual sales, in volume or dollar value, in relation to the goals or quotas set for that salesperson? Is the salesperson meeting his or her goals, exceeding them or falling short of them? Normally, when a salesperson meets his or her quota, it is raised for the next year. If the quota is not met, it is necessary to examine the situation and determine why. Another variation of this measure would be to look at the level of commissions the salesperson has received. Once again, these measures can be segmented by customer type, size of the account, or the level of services.

Sales Activities. The final category for measuring performance would be to analyze the actual sales calls. Sales goals may focus on the number, or percentage, of new account calls. The salesperson's time must be allocated between existing accounts and developing new business. For example, how many cold calls are made per week or per month? How many sales presentations are actually performed?

Negotiating Skills

In today's environment, salespeople should be ready to negotiate with buyers from both consumer and industrial markets. There is a proliferation of information available to consumers, including tips and suggestions for getting the "best deals" from manufacturers and retailers. Advances in technology make this information easy to access, thereby allowing consumers to compare alternatives with minimal information research. The negotiation process is particularly critical in industrial markets because of the high volume. For example, if a hotel sales manager is negotiating the room rate for 500 rooms over four nights (2,000 room nights), a reduction of $5 in price results in a decrease in revenue of $10,000. This transaction could take place over a matter of seconds.

The goal of any negotiation is to achieve a win-win situation. It is important not to take the negotiation process as a competition because someone will end up losing. Dissatisfied customers do not return, and they provide negative word of mouth to their colleagues. Rather, it is important to create an exchange that results in the involved parties' mutual satisfaction. A good sales manager will plan for the sales presentation and the inevitable negotiation process. A complete knowledge of the competitive environment will provide useful parameters for steering the negotiations. In addition, the sales manager should develop acceptable ranges and options for negotiating to ensure profitability. The following tips will improve the sales manager's potential for success in negotiating. (1)

* When you give something up, try to gain something in return. Once you show a tendency to negotiate, prospects will try to negotiate on every item. Therefore, make it clear that you expect something in return for making concessions. For example, a hotel sales manager could say "I'll lower the room rate by $5 per night if you guarantee 100 rooms for 4 nights."

* Do not make too many concessions at an early stage. Once a salesperson starts to make concessions it becomes contagious. The buyer will realize that concessions can be made and will try to negotiate every little component of the service. Therefore, it is advisable to postpone some issues until later in the negotiations, after most of the decisions are made.

* Look for items other than price to negotiate. As mentioned earlier, a small reduction in price could result in a large decrease in revenue when dealing with volume business. Sales managers can focus on items other than room rates. For example, planners could be given free meeting space, room upgrades, reduced meal prices, or free audiovisual equipment. All of these items would have a much smaller impact on the hotel's bottom line and they provide buyers with a sense of accomplishment.

* Do not attack your prospect's demand; look for the motive behind it. Try not to tell a prospect that his or her demand is ridiculous or unreasonable. This will only anger the prospect and have a negative impact on the negotiations. Instead, remain calm and ask the prospect to explain the reason for making such a demand. For example, if a meeting planner asks for a very low room rate it may be because of a small, or restricted, budget.

* Do not defend your position; ask for feedback and advice from the prospect. If you meet resistance to your offer, don't become defensive. Simply ask the prospect why he or she thinks that it is unreasonable. Asking, "What would you do if you were in my position?" is often beneficial in this situation.

The more sales calls you make, the more knowledgeable you become regarding the "do's" and "don'ts" of negotiation. Hopefully, this learning process will not cost your firm too much along the way.

It is also important to recognize any unhelpful behaviors being exhibited by the buyers. Common problems you could encounter are buyers' becoming confused or indecisive. In addition, buyers may become emotional or aggressive in their behavior. The table in Figure 13-4 lists these problem areas and provides possible solutions for each area.

Ethical Issues in Personal Selling

As with most other areas of business, there is also the potential for unethical behavior by salespeople. Firms' policies and practices should provide salespeople with a good understanding of allowable behavior or conduct. When these policies are written and used in training, salespeople are more likely to adhere to the firm's ethical standards. The following is a brief description of the most common types of unethical behavior among salespeople.

* Sharing confidential information. Salespeople and customers build close relationships over time that lead to the disclosure of confidential information based on trust. There is a potential for salespeople to share this information with customers' competitors, either voluntarily or involuntarily. Salespeople need to be cognizant of this possible breach and realize that it may backfire. This behavior speaks to the character of the salespeople.

* Reciprocity. This refers to the mutual exchange of benefits between buyers and sellers. If a firm has a policy of reciprocity, this can be viewed as an exclusive tying arrangement, which is illegal. For example, the case where a hotel may only purchase supplies from firms that agree to use its services for corporate travel.

* Bribery. Bribes in the form of monetary payoffs or kickbacks are unethical, if not illegal. Many U.S. firms find themselves at a disadvantage in international markets when their corporate policies, and U.S. laws, forbid them from engaging in the practice of offering bribes in countries where it is accepted as a normal business practice. Some meeting planners have coerced hotels into giving them kickbacks from the room revenues for their meetings.

* Gift giving and entertainment. There is a fine line between gift giving, entertainment, and bribery. If the gift is being used to obtain the customer's business, then it amounts to a bribe. Gifts should only be given after contracts are signed as a symbol of the firm's gratitude. Meeting planners are inundated with gifts in the form of hotel coupons and frequent guest points, or even frequent flier miles. Also, "wining and dining" clients is a popular sales technique. "Fam," or familiarization, trips provide meeting planners and travel agents with free hotel rooms, airline travel, and entrance to tourist attractions or special events. In response, some firms have policies regarding the acceptance of gifts and entertainment by meeting planners and travel agents.

* Making misleading sales claims. In their pursuit of sales and quotas, salespeople may decide to provide customers or prospects with misleading information. It is not uncommon in hotel sales for sales managers to promise meeting planners' items that the food and beverage department cannot deliver. This results in some difficult negotiations at the time of the meeting. Another misleading practice is blind cutting, which was discussed in Chapter 11.

* Business defamation. Salespeople sometimes make disparaging comments about their competitors when dealing with customers. Not only does this reflect poorly on the salespeople and their firms, but, in some instances, it is actually illegal (slander or libel). It is very tempting to take a "cheap shot" at a competitor when making comparisons between properties or firms. However, salespeople should constrain themselves to answering specific questions with factual information.

The extent to which a firm is successful in deterring unethical behavior on the part of its employees will depend on the firm's treatment of employees who violate its policies and the level of support for the policies throughout the organization.

Key Concepts

Chapter 13 presents some personal selling tools that could be used by salespeople to improve their performance. There is also a discussion of ethics in personal selling.

Time management

* setting sales goals

* developing sales strategies

* implementing sales strategies

* measuring performance

Negotiating skills

* When you give something up, try to gain something in return.

* Do not make too many concessions at an early stage.

* Look for items other than price to negotiate.

* Do not attack your prospect's demand--look for the motive behind it.

* Do not defend your position--ask for feedback and advice from the prospect.

Ethical issues

* sharing confidential information

* reciprocity, mutual exchange of benefits

* bribery

* gift giving and entertainment

* making misleading sales claims

* business defamation

Endnotes

(1) Futrell, Charles M., (1996) Fundamentals of Selling: Customers for Life, Chicago, IL: The McGraw-Hill Companies, Inc., 243.
Figure 13-1 A Salesperson's Day

Activity                Percentage of Time

Travel                        25-30%
Waiting                       20-25%
Paperwork                     20-25%
Casual conversation            5-10%
Selling                       20-25%

Figure 13-3 Account Classification Grid

                     High Profit Margin    Low Profit Margin

High Potential for
Increased Business   desirable accounts   undeveloped accounts

Low Potential for
Increased Business   developed accounts   undesirable accounts

Figure 13-4 Common Problems

Problems           Possible Solutions

Confused buyer     * Use visual aids to clarify complex issues.
                   * Put proposals in writing using clear and concise
                     language.
                   * Use a step-by-step agenda to avoid confusion.

Indecisive buyer   * Proceed slowly and methodically; repeat important
                     points.
                   * Promise to review the issues at a later time.
                   * Try to present the issues in an original manner.

Aggressive buyer   * Repeat the facts, keeping calm and avoid emotional
                     language.
                   * Refuse to be drawn into an argument, or battle.
                   * Suggest a recess if things get too emotional and
                     heated.

Emotional buyer    * Don't challenge the motives or integrity of the
                     buyer.
                   * Don't interrupt outbursts, be patient and wait to
                     respond.
                   * Try to be rational and use logic; recess,
                     if necessary.
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Title Annotation:selling methods
Publication:Hospitality Sales: Selling Smarter
Geographic Code:1USA
Date:Jan 1, 2004
Words:3652
Previous Article:12 Servicing the meeting.
Next Article:14 Revenue management and price negotiation.
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