1. WHAT IS THE
SALES MANAGEMENT FUNCTION?
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THE
SALES MANAGEMENT FUNCTION
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Development of a sales
organization represents an integral part of the
sales management process.
The implementation of marketing plans
and promotion programs is effected by active
selling of products and services in the marketplace. It
is essential, therefore, to establish a suitable
sales organization to meet relevant marketing
objectives and to develop a Sales Management
Function within the company.
The sales management
function does not stand in isolation from other
organizational responsibilities. On the contrary,
it represents a part of a well-integrated system
of functions, as illustrated below.
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FIVE
AREAS OF A COMPANY'S ACTIVITIES
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General
Administration Management Function
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Human
Resources Management Function
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Financial
Management Function
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Production
And
Operations Management Function
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Marketing
And
Sales
Management Function
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CONNECTION
BETWEEN MARKETING
AND SALES MANAGEMENT FUNCTIONS
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The Sales Management Function represents
an integral part of the marketing management
function. The sales manager, therefore,
is responsible for developing an effective
Sales Organization in order to
implement all aspects of the company's marketing
plan.
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2.
WHAT IS THE SALES ORGANIZATION DEVELOPMENT PROCESS?
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THE
SALES ORGANIZATION DEVELOPMENT PROCESS
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The Sales Organization Development Process
entails creation of a specific pattern
of work in which human and material resources
can be utilized in the most efficient manner.
Thus, the prime task of the sales manager
is to develop a suitable organizational structure
that will stimulate all employees toward effective
performance.
Since the sales
organization development process represents
a continuous task that is carried out in a constantly
changing environment, it is essential to ensure
high flexibility of the Sales Organizational
Structure. This is particularly important
when a company plans to accomplish specific
tasks, as outlined below.
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REASONS
FOR A FLEXIBLE SALES ORGANIZATIONAL STRUCTURE
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No.
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Details
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1
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To introduce
new products or services into the market.
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2
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To develop
new sales territories.
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3
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To meet constantly
changing customers' needs.
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4
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To establish
another sales branch.
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RESPONSIBILITY,
AUTHORITY, AND ACCOUNTABILITY IN A SALES ORGANIZATION
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Development of an effective and flexible sales
organizational structure also entails definition
of three important elements, namely: Authority,
Responsibility,
and
Accountability for each key position
within the sales organization. These elements
have been discussed earlier in Tutorial 1.
(48)
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SALES
ORGANIZATIONAL ISSUES
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No.
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Details
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1
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To delegate
responsibility, authority, and accountability
in the sales department.
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2
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To establish
a routine sales reporting procedure.
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3
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To develop
a specialized range of sales activities and
sales training..
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4
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To establish
a centralized or decentralized control over
sales activities.
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The basic
Sales Organization Development Process entails
four steps, as outlined below.
(49)
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STEPS
IN THE SALES ORGANIZATION DEVELOPMENT PROCESS
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Step 1: Determine
The Tasks That Must Be Performed To Implement
The Sales Plan, e.g. Forecasting, Prospecting,
Selling, Order Taking.
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Step 2: Classify
The Tasks And Group Them Into Related Sets
Of Activities On The Basis Of Product, Customer,
Or Sales Territory Requirements.
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Step 3: Assign
Set Of Activities To An Individual Position
Or Positions.
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Step 4: Establish
Supervision And Reporting Relationships
Between Positions.
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3.
WHAT SHOULD BE CONSIDERED DURING A SALES ORGANIZATION
DEVELOPMENT PROCESS?
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THE
UNITY OF COMMAND PRINCIPLE
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One important consideration of the
sales organization development process is the
Unity of Command Principle. This principle
suggests that each employee should report to
only one person within the organization.
This is a general principle that is
particularly useful in the sales management
environment. When employees report to more than
one individual, they may be given contradicting
instructions that can, in turn, cause ineffective
performance. It is essential, therefore, to
prevent such a condition to avoid confusion
among sales employees.
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SPAN
OF CONTROL
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Another issue that should be considered
by the sales manager relates to the Span
Of Control, or the number of subordinates
that can be effectively supervised by one manager.
The importance of this issue depends upon the
size of the sales organization and is particularly
critical for larger companies. Small and medium-sized
organizations usually employ a moderate number
of sales people and seldom experience problems
caused by an excessive span of control.
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CENTRALIZATION
OR DECENTRALIZATION OF CONTROL
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The sales manager should also consider
the issue of Centralization Or Decentralization
Of Control over the company's sales activities.
A small organization normally starts its operations
from one office, and management exercises centralized
control over sales force activities. When the
organization grows and develops business relations
with customers in different geographic locations,
however, it may be useful to decentralize control
over the sales force activities. This may require
a branch to be opened in a suitable geographic
location in order to ensure effective service
of local customers.
Decentralization
of sales activities helps minimize the travel
time and expenses incurred by sales people
and maximize the quality of sales service provided
by customers.
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ORGANIZATIONAL
SPECIALIZATION
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Finally, important consideration should
be given by the sales manager to the issue of
Organizational Specialization.
Since companies build their activities around
customer requirements, it is essential to develop
a sales organization that will provide the most
effective service in the marketplace. Several
types of organizational specialization could
be considered by the sales manager, as illustrated
below.
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TYPES
OF THE SALES ORGANIZATIONAL SPECIALIZATION
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Geographic
Specialization
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Product
Specialization
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Customer
Specialization
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Functional
Specialization
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4.
WHAT IS A GEOGRAPHICALLY-SPECIALIZED SALES ORGANIZATION?
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GEOGRAPHICALLY-SPECIALIZED
SALES ORGANIZATION
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Geographic Specialization is particularly
suitable for an organization that operates in
widespread geographic markets.
In this type of organization, each sales person
is assigned to sell all products to all customers
within a specified geographic location. A typical
structure of a Geographically-Specialized
Sales Organization is illustrated below.
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Main advantages and
disadvantages of the geographically-specialized organization
structure are outlined below.
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GEOGRAPHICALLY-SPECIALIZED SALES ORGANIZATION
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Advantages
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Disadvantages
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One of the advantages of this structure is
that it stimulates development of strong ties
between sales people and their customers. In
addition, travel time and selling costs can
be substantially reduced because each sales
person covers limited sales territory.
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One of the disadvantages of this structure
is that a particular sales person can handle
only a limited number of uncomplicated products
or product lines.
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5.
WHAT IS A PRODUCT-SPECIALIZED SALES ORGANIZATION?
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PRODUCT-SPECIALIZED
SALES ORGANIZATION
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Product Specialization is generally
used by industrial organizations that offer
various lines of products to the market.
This type of structure is effective in the distribution
of different highly-technical products. In this
type of organization, each sales person is trained
to handle a particular product or product line.
Thus, the number of sales people depends upon
the variety of products handled by the organization.
A typical structure of a Product-Specialized
Sales Organization is illustrated below.
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Main advantages and
disadvantages of the product-specialized sales organization
are outlined below.
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PRODUCT-SPECIALIZED
SALES ORGANIZATION
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Advantages
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Disadvantages
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One of the advantages of this structure is
that it stimulates development of sound product
knowledge by sales people. This, in turn,
enables the company to provide an effective
product and technical support to their customers.
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One of the disadvantages of this structure
is that each sales person must cover a much
larger territory, which increases traveling
time and selling expenses.
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6.
WHAT IS A CUSTOMER-SPECIALIZED SALES ORGANIZATION?
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CUSTOMER-SPECIALIZED
SALES ORGANIZATION
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Customer Specialization is frequently
used by organizations that offer their products
to different industries.
In this type of an organization, each sales
person is assigned to a particular industry
or individual customer. A typical Customer-Specialized
Sales Organization structure is illustrated
below.
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Main advantages and
disadvantages of the customer-specialized sales organization
are outlined below.
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CUSTOMER-SPECIALIZED
SALES ORGANIZATION
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Advantages
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Disadvantages
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One of the advantages of this structure is
that it allows the sales person to become
an expert on the customers' operations and
stimulates the development of strong company-customer
relations.
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One of the disadvantages of this structure,
similar to the disadvantages of product
specialization, are that each sales person
must cover a wide territory, spend more
time on the road, and incur high selling expenses.
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7.
WHAT IS A FUNCTION-SPECIALIZED SALES ORGANIZATION?
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FUNCTION-SPECIALIZED
SALES ORGANIZATION
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Functional Specialization is most appropriate
for organizations that offer relatively narrow
product lines to non-segmented and geographically
concentrated markets.
In this type of an organization, each sales
person is assigned particular functional responsibilities
for the entire range of customers. Two basic
responsibilities are usually assigned to
sales people in Function-Specialized Sales
Organizations, as outlined below.
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TWO
MAIN RESPONSIBILITIES IN A FUNCTION-SPECIALIZED
SALES ORGANIZATION
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No.
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Details
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1
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Developing
new accounts.
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2
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Maintaining
existing ones.
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UNDERSTAND
VARIOUS TYPES OF SALES SPECIALIZATION
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In a Functional Sales Organization new
accounts are generally developed by sales executives,
and existing accounts are maintained by specially
trained sales personnel. Functional specialization
has limited application for small and medium-sized
organizations, and is used infrequently.
It is essential
that the sales manager understands the different
types of specialization that can be used in
the sales organization development process. Companies
with widespread markets usually use geographic
specialization, and those with diverse product
lines find product specialization effective.
If customers have
highly-specialized needs, customer specialization
is frequently used, and functional specialization
is applied when team selling is more appropriate.
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8.
WHAT JOB DESCRIPTIONS ARE NEEDED IN A SALES ORGANIZATION?
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JOB DESCRIPTIONS IN A SALES ORGANIZATION
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Once a sales organization is established,
management must prepare several Job
Descriptions for key positions within
the sales department. Availability of job
descriptions will help management to provide
sales employees with specific guidelines related
to their work with the company and avoid any
possible misunderstandings and even help prevent
conflicts.
The issues related
to job descriptions and job specifications has
been discussed in detail in Tutorial 2. Each
job description should contain the following
information, as outlined below.
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ELEMENTS OF A JOB DESCRIPTION
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No.
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Details
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1
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The job title.
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2
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The job summary.
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3
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Details of
accountability.
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4
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Details of
responsibility and duties.
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5
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Details of
authority.
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6
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Participation
in management teams.
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In order
to provide a clear guidance to employees within the
sales department the job descriptions should be prepared
for the following positions, as outlined below.
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JOB
DESCRIPTIONS IN A SALES DEPARTMENT
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No.
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Details
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1
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Sales manager.
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2
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Sales representative.
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3
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Internal sales
associate.
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Example
of a job description for the sales manager is illustrated
next. Additional examples of job description will
be illustrated later.
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9.
SMALL BUSINESS EXAMPLE:
JOB DESCRIPTION FOR A SALES MANAGER
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Title:
Sales Manager
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Appointed
By: Marketing Executive
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Responsible
To: Marketing Executive
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Responsible
For: The attainment of pre-determined
sales objectives in accordance with the
overall company's strategy, policies, budgets, and the
marketing plan.
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Function:
To establish and maintain a sales force
motivated to achieve desired goals
through demonstration of personal selling
ability, administrative, and financial
skills commensurate with sales activities.
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Duties
And Responsibilities:
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Determine
in collaboration with the marketing executive
the types of outlets best suited for
the sale of the company's products and/or services.
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Determine
in what areas the company's products and/or
services are likely to achieve desired
results.
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Recruit
in collaboration with the human resources
manager suitable sales employees
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Allocate
adequate number of employees for selling
activities in designated areas.
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Establish
individual sales targets commensurate with
area's potential sales revenues.
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Establish
and maintain a sales routing or sales call
system.
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Allocate
appropriate transport to sales employees.
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Devise
suitable recording systems for customers
and potential buyers together with
adequate monitoring systems for all sales activities.
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Ensure
that suitable product knowledge and selling
methods are a regular feature of in-house
training.
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Establish
correct budgeting procedures for all sales
activities in collaboration with them
marketing executive.
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Monitor
and control all financial expenditures associated
with the selling function.
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Advice
the marketing executive and financial executive
on all aspects of remuneration, bonus
and incentive schemes for sales employees.
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Ensure
that all sales employees promote the desired
company's image by their appearance and
conduct.
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Ensure
that all sales employees are fully conversant
with the overall objective of the company
and know exactly what role each has to play
in achieving them.
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Conduct
a regular sales employees performance appraisal
and record all relevant findings in
the individual sales person's performance
file.
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Conduct
regular sales meetings to ensure that each
sales person receives most updated
sales and corporate information on a regular
basis.
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Participate
in the company's management meetings to
provide the management staff with all
information relevant to the sales department's
performance.
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Chairperson
in the weekly sales management meetings.
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Participant
in the company's weekly/bi-weekly/monthly
management meetings.
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10. FOR SERIOUS BUSINESS OWNERS ONLY
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Reprinted
with permission. |
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