Personal Selling Tutorial
In the past few tutorials, we saw how marketers can use advertising, sales promotion, and public relations to reach a large number of customers. Unfortunately, advertising and sales promotion each share one significant disadvantage: these are primarily non-personal forms of communication. While public relations contains elements of personal communication with the use of social media and email, it often lacks the advantages found when communicating face-to-face with a potential customer. And whether an organization is in retailing or manufacturing, sells goods or services, is a large multi-national or a local startup, is out to make a profit or is a not-for-profit, in all probability at some point they will need to rely on personal contact with customers. In other words, they will need to promote using personal selling.
Unfortunately, personal selling is widely misunderstood. For instance, many customers think salespeople possess traits that include being manipulative, arrogant, aggressive, and greedy. And some marketers believe salespeople are only out to make a quick sale intended to increase their income and that they often do this by making unscrupulous deals undermining the marketer’s attempt to build strong brands.
While there certainly are some salespeople that fit these descriptions, today the most successful salespeople are those who work hard to understand their customers’ needs with the ultimate goal of ensuring that customer’s needs are satisfied at a high level. And, more importantly, personal selling holds a key role in the promotional activities of a large number of organizations. In fact, in the business market, where one company sells products to another company, money spent to support the selling function far exceeds spending on advertising.
In this part of our highly detailed Principles of Marketing Tutorials, we begin a three-part look at personal selling. We will continue our coverage of personal selling in the next two tutorials when we discuss Types of Selling Roles and The Selling Process used to obtain a customer order.
What is Personal Selling?
Personal selling is a promotional method in which one party (e.g., salesperson) uses skills and techniques to build personal relationships with another party (e.g., those involved in a purchase decision) that results in both parties obtaining value. In most cases the “value” for the salesperson is realized through the financial rewards of the sale while the customer’s “value” is realized from the benefits obtained from consuming the product. However, getting a customer to purchase a product is not always the objective of personal selling. For instance, selling may be used for the purpose of simply delivering information. Because selling involves personal contact, this promotional method often occurs through face-to-face meetings, telephone conversation, video conferencing, or online chat.
Among marketing jobs, more are employed in sales positions than any other marketing-related occupation. In the U.S. alone, the U.S. Department of Labor estimates that over 14.5 million or about 10% of the overall labor force are directly involved in selling and sales-related positions. Worldwide this figure may be closer to 100 million. Yet these figures vastly under-estimate the number of people who are actively engaged in some aspect of selling as part of their normal job responsibilities. While millions of people can easily be seen as holding sales jobs, the promotional techniques used in selling are also part of the day-to-day activities of many who are usually not directly associated with selling. For instance, top corporate executives, whose job title is CEO or COO, are continually selling their company to major customers, stock investors, government officials, and many other stakeholders. The techniques they employ to gain benefits for their companies are the same used by the front-line salesperson to sell to a small customer. Consequently, our discussion of the promotional value of personal selling has implications beyond marketing and sales departments.
Advantages of Personal Selling
Personal selling can prove to be a used promotional method in several ways including:
Two-Way Form of Communications – Unlike other promotional methods, personal selling is a two-way form of communication, which enables a salesperson to adjust the message as she/he gains feedback from the customer (e.g., adjust message if customer does not fully understand how the product works).
Effective in Building Personal Relationships – The interactive nature of personal selling makes it the most effective promotional method for building relationships with customers, which is particularly important when purchases take a considerable amount of time to complete (e.g., business-to-business purchasing).
Important in International Sales – Building relationships is also a critical part of the personal selling process when doing business internationally, especially in such area as Asia and Latin America, where personal relationships between buyer and seller are often more important than seeking the best business deal.
Best Promotion for Hard to Reach Customers – Personal selling is the most practical promotional option for reaching customers who are not easily reached through other methods (e.g., do not response to advertising, public relations, and sales promotions).
Disadvantages of Personal Selling
Personal selling has a number of drawbacks that may not make it the best promotional option for some organizations including:
Negative Perception of Salespeople – Possibly the biggest disadvantage of personal selling is the degree to which this promotional method is misunderstood as many view salespeople as being overly aggressive or even downright annoying, and only interested in making a quick sale.
Expensive to Maintain a Sales Force – Organizations face numerous expenses when utilizing this method of promotion including:
- High cost-per-action (CPA) – As noted in the Types of Promotion Tutorial, promotional success can often be evaluated using the cost-per-action (CPA) measure. For an organization, the money spent to support a sales staff can be steep. These costs include compensation (e.g., salary, commission, bonus), providing support materials (e.g., product literature), allowances for entertainment spending, travel expenses, office supplies, telecommunication, and much more.
- Training Costs – The cost of training a sales team can also be quite high and include such expenses as travel, hotel, meals, and training equipment, and while salespeople are in training, an organization is most likely also paying certain fixed costs including the trainee’s salary, health care, and other expenses (e.g., mobile phone).
High Job Turnover – Job turnover in sales is generally much higher than it is for other marketing positions. Turnover may leave a company without representation in a customer group (e.g., customers in a geographic region) for an extended period of time while the company recruits and trains a replacement.
Books from KnowThis.com
Objectives of Personal Selling
Personal selling is used to meet the five objectives of promotion in the following ways:
Building Product Awareness – A common task of salespeople, especially when selling in business markets, is to educate customers on new product offerings. In fact, salespeople serve a major role at industry trades shows, where they discuss products with show attendees. But building awareness using personal selling is also important in consumer markets. As we will discuss, the advent of controlled word-of-mouth marketing is leading to personal selling becoming a useful mechanism for introducing consumers to new products.
Creating Interest – The fact that personal selling involves person-to-person communication makes it a natural method for getting customers to experience a product for the first time. In fact, creating interest goes hand-in-hand with building product awareness as sales professionals can often accomplish both objectives during the first encounter with a potential customer.
Providing Information – When salespeople engage customers a significant amount of the conversation focuses on product information. Consequently, most marketing organizations provide their sales staff with extensive sales support, including slide presentations, brochures, research reports, online videos, and many other forms of informational material.
Stimulating Demand – The most fundamental objective of personal selling is to convince customers to make a purchase. As we show in The Selling Process Tutorial, getting customers to buy is the prime function of a large segment of selling jobs
Reinforcing the Brand – Most personal selling is intended to build long-term relationships with customers. A strong relationship can only be built over time and requires regular communication with a customer. Meeting with customers on a regular basis allows salespeople to repeatedly discuss their company’s products and by doing so helps strengthen customers’ knowledge of what the company has to offer.
Types of Personal Selling Roles
As we noted above, worldwide millions of people have careers that fit in the personal selling category. However, the actual functions carried out by someone in sales may be quite different. In general, selling roles can be classified as:
- Order Getters – New Business Development
- Order Getters – Account Management
- Order Takers
- Order Supporters
- Sales Supporters
The objectives of each role are often very different and within each role there are several sub-classifications. A detailed discussion of each role can be found in the Types of Selling Roles Tutorial.
Trends in Personal Selling
While the basic premise of personal selling, building relationships, has not changed much in the last 50 years, there are a number of developments that are impacting this method of promotion including:
1. Customer Information Sharing
Possibly the most dramatic change to occur in how salespeople function on a day-to-day basis involves the integration of customer relationship management (CRM) systems into the selling arena. CRM is the name given to both the technology and the philosophy that drives companies to gain a better understanding of their customers with the goal of building stronger long-term relationships. The essential requirement for an effective CRM system is the need for all customer contact points (e.g., salespeople, customer service, websites) to gather information so that this can be shared with others in the company.
But CRM has faced some rough times within the sales force for the exact reason it is important: salespeople must share their information. Salespeople historically have been highly effective at developing relationships and learning about customers, but often loath sharing this with others since possessing detailed customer information is an important element in what makes a salesperson valuable. For example, some salespeople feel sharing all they know about a customer will make them expendable since a company can simply insert someone new into their role who will have access to the customer information collected by the person she/he replaced.
While the attitude toward CRM has made its implementation difficult in many organizations, salespeople should understand that it is not going away. CRM and information sharing have proven to be critical for maintaining strong customer relations and salespeople must learn to adapt to it.
2. Reliance on Mobile Technology
The move to an information sharing approach is most effective when salespeople have ready access to CRM and other information sources. With mobile communication available almost anywhere, such access allows salespeople to retrieve needed information at any time. For instance, if a salesperson takes a customer to lunch, he/she can quickly access their company website or specialized software to respond to customer questions, such as how long it may take to receive a product if an order is placed. The implication is that salespeople are now truly mobile as nearly all of their software applications are accessible from almost anywhere.
Additionally, the proliferation of mobile apps provides an abundance of options for increasing sales force productivity. For instance, apps can be used to: deal with customers (e.g., take notes, store business cards); manage files (e.g., scan documents; access online files); prepare for meetings (e.g., update a slide presentation, schedule transportation, find food); and much, much more.
3. Use of Social Media
The sales forces’ adoption of mobile technologies has made it easier for them to explore the use of social networks for building business relationships. While salespeople actively use consumer-oriented social media, such as Facebook and Twitter, the most popular social network for building sales relationships is Linkedin, since it is primarily aimed at business people. Consequently, the contacts found through Linkedin tend to be of higher quality than contacts found through other social networks.
4. Electronic Sales Presentations
Technology is also playing a major role in how sales professionals engage existing and potential customers. The combination of advances in the speed of data communication, computing power, and meeting software have made electronic sales presentations a practical and cost-effective alternative to in-person selling. Salespeople have several options for electronic sales presentations including:
Video Conferencing – A widely used method of electronic sales presentations is one delivered through video conferencing. In particular, many salespeople now use video conferencing in the first stage of the sales process as it can greatly lower the initial cost of reaching sales prospects (e.g., reduces travel expense). However, anyone who has an internet or mobile network connection knows that communicating via video can be a trying experience as the image and sound quality may appear to be slow, jittery, and sometimes not even recognizable. Today, these problems are improving and real-time video conferencing (i.e., television quality video and audio) is becoming more accessible to most salespeople.
Web/Phone Conferencing – To offset the problems associated with delivery of real-time video conference, many organizations deliver sales presentations using a combination of web and telecommunications. These services use the internet to deliver visual material (typically a slide presentation) and telecommunications to provide voice conversation. The process has a salesperson arrange for a conferencing time with a prospect who enters the conference by: 1) using their web browser or mobile app to gain access to the visual presentation, and 2) using their telephone to call into an audio conference. Splitting the visual and audio feeds allows for smoother presentations since the conference participants’ computers or tablets need only process the visual material.
Online Text Chat – Online chat allows for real time communication between multiple participants using text messaging. While this form of buyer-seller communication may not be very effective at getting customers to agree to make a purchase, it has proven very beneficial in building initial interest in products. For example, potential customers visiting a website may use the chat feature to ask a few questions about the company’s products. Engaging a customer this way can then lead to the customer agreeing to receive a phone call from a salesperson to further discuss the product.
Virtual Trade Shows – In the business-to-business market, industry trade shows are a convenient promotional method for reaching many potential buyers in a short period of time. Unfortunately, trade shows can be quite expensive to attend for both buyers and sellers. Yet the value trade shows possess for generating sales leads has persuaded many organizations to explore other meeting options, including online or virtual trade shows. These meetings take place through special “venues” created on the internet, which allow participants to attend while sitting in front of their computer.
5. Electronic Sales Training
Developing the skills and techniques needed to be successful at selling requires the individual seller and the seller’s organization to be fully committed to sales training. Sales training is the hallmark of professional selling. If there is one characteristic separating the truly successful salesperson from those who are not successful, it is the amount of training and preparation they have received.
Most organizations employing a sales force offer new salespeople an extensive formal in-person training program, often held at dedicated training facilities. The length of training programs ranges from a few days to many months depending on the industry. But once a salesperson has moved on to selling to customers, training does not stop. Those involved in selling must continue to stay abreast of their products, customers, markets, and competitors. While many companies continue to deliver ongoing training using the same in-person methods used when they first trained their salespeople, a large number of firms are finding that training can be just as effective using electronic options, such as delivering training over the internet using a customized learning management system (LMS).
While feedback using electronic means is not as personal as in-person training, sophisticated electronic training programs are effective in educating and testing trainees’ knowledge. Also, a real trainer can be available via email, online chat, social media, or by a phone if a question does arise.
Additionally, compared to paper-based materials, electronic delivery of training materials is low cost and can be made available to the entire sales force in a short time frame. Also, the use of messaging services (e.g., text message, Twitter), specialized apps, and email enables salespeople to be immediately notified when new material is published. This is useful when the sales force must be made aware of new information, such as a price change or new information on a competitor’s product.
6. Controlled Word-of-Mouth Promotion
One of the most influential forms of promotion occurs when one person speaks highly of a product to someone else, particularly if the message sender is considered an unbiased source of information. Until recently, marketers have had little control over person-to-person promotion that did not involve salespeople (i.e., biased source). However, marketers are using new methods of promotion that strategically take advantage of the benefits offered by word-of-mouth promotion. Unlike salespeople who often attempt to obtain an order from customers, controlled word-of-mouth promotion uses real people to help spread information about a product but do not directly elicit customer orders.
With controlled word-of-mouth promotion, a marketer hires individuals to spread positive information about a product but in a way that does not make it obvious that they are being paid to do so. This technique is especially useful when building a high level of awareness for a new product. For example, a brewer may form a team of word-of-mouth marketers who visit local taverns and night spots, or actively post on social media. As part of their job, these marketers may “talk up” a new beer sold by the brewer and even purchase the product for some customers. Yet they may carry out their task without directly disclosing that they are being compensated for their efforts.
While controlled word-of-mouth has received a great deal of marketer interest, this form of promotion has also been subjected to negative publicity due to potential ethical issues it raises. Some believe that paying people to “act” as if they are interested in a product without any indication of their relationship with the product breaches ethical standards. These critics feel that any type of organized promotion, where marketers are compensated for their efforts, must come with full disclosure to those receiving the message.
7. Use of Customer Teams
As we noted in our discussion of technical specialists, salespeople may require the assistance of others in their organization in order to deal effectively with prospects. In fact, many companies are moving away from the traditional sales force arrangement, where a single salesperson handles nearly all communication with an account, in favor of a team approach where multiple personnel are involved.
Teams consist of individuals from several functional areas, such as marketing, manufacturing, distribution, and customer service. In some configurations, all members share bonuses if the team meets sales goals. Clearly to be effective a team approach will require the implementation of a strong customer relationship management (CRM) system.