What It Means
When a good is exchanged for an agreed sum of money, it is said to have been sold. Selling includes all of the activities involved in making sales of goods and services to buyers. These activities include contacting potential customers, presenting and demonstrating products, taking orders for products, delivering products, and collecting payment. Many activities are involved in selling a new textbook, for example, to a school district. The textbook publisher may send out information about the book, arrange meetings with curriculum directors at the school district, give presentations to demonstrate how the product will improve teaching and student learning, and answer questions about the textbook. If the buyer agrees to purchase the textbook, the seller then takes orders for the school district, makes sure that the books are delivered by a specified date, and ensures that payment for the books is received.
Sales management is the administration of a company’s sales program. Sales managers are responsible for planning, executing, and controlling sales programs. The personnel who are employed to conduct sales activities are called the sales force. Large and mid-size companies typically have a sales force. Small companies may rely on the owner or another individual to oversee product sales.
A person who is employed to represent a business and to sell its products is a sales representative. In a larger company, once a sale has been completed, it becomes what is called a key account. The manager or executive of a key account is responsible for knowing all there is to know about the account, including its history, growth, major representatives, and future strategies.
Sales representatives are compensated either by a commission or by a salary. If a sales representative is paid on a commission, the compensation for closing (completing) a sale is directly tied to the value of the sale. Therefore, if a sales representative has a commission of 10 percent on every sale and he or she closes a sale valued at $10,000, he will be paid $1,000 by the company. If a representative is compensated with a salary, he or she is paid a fixed compensation periodically by the company.
When Did It Begin?
The art and science of selling is thousands of years old. Merchants have always induced buyers to purchase their goods. In general, each merchant took care of all of the aspects of his or her enterprise, including creating the product, marketing, selling, and accounting.
The Industrial Revolution changed business in fundamental ways. As factories developed, industries were able to produce many different products in mass quantities. Businesses began to market and sell their products to consumers who lived far away. As a result, businesses needed dedicated salespeople to cover large areas and increase the number of customers. Most of these early sales representatives were paid on a commission basis and, in general, had little allegiance to the firm where they worked. Businesses tended to focus on sales quotas and whether the correct quantity of products was shipped rather than on customers’ needs and how to increase customer satisfaction.
Beginning in the 1970s the sales environment shifted significantly. Greater competition forced companies to view selling as the way to gain the trust of prospective customers and build a relationship with existing customers. Developing and maintaining customer loyalty and satisfaction became one of the central imperatives of the sales force.
More Detailed Information
Personal selling is the term for selling that relies on an interpersonal, or person-to-person, influence between a sales representative and a customer. It often involves the seller’s promotion of the product for sale, meaning that the seller emphasizes the benefits and strengths of the product in order to increase sales. Personal selling occurs through many types of sales channels, or ways that customers may access products. Each sales channel has unique aspects that suit it to particular sales situations:
- Over-the-counter selling involves customers coming to the place where the seller is conducting business. This type of selling is appropriate for moving goods and services, such as groceries, hardware, and household appliances, that meet typical, routine needs.
- Field selling is the term for sales presentations that the seller makes face-to-face with customers, usually traveling to customers’ homes or businesses. Field selling is common in situations in which customers need solutions to complex problems and in which there will be many phases of the sale, such as setting up a computer system for a new business.
- With inside selling, an individual salesperson also makes sales presentations directly to customers. However, inside selling avoids the expenses of travel by relying on the telephone, mail, and electronic commerce (commerce conducted via the Internet, or “e-commerce”) to make sales and provide product service to customers. Inside selling is appropriate for situations in which customers need to ask questions on an ongoing basis about the product they have bought.
- Telemarketing is the term for selling that generally relies on the telephone, though it may also involve sales representatives traveling to meet customers or customers initiating calls themselves in order to obtain information and place orders. Usually telemarketing is conducted by sellers who want to reach new customers or the customers of their competition.
- With online selling, all elements of the sale are conducted via the Internet. Customers use the Internet to access product information, check prices, and place their own orders without input from an actual salesperson.
There are numerous other types of selling. A trade salesperson has a position with a manufacturer and is in charge of representing the manufacturer’s products to wholesalers or retailers. The job entails visiting wholesalers or retailers, presenting information about new products, closing sales, and following through on the order delivery. Technical selling is similar to trade selling, but it differs in that the products are more technical in nature, such as chemicals as electronic equipment. The customers are other businesses that use the product. “Missionary sales” is a type of sales role in which a specialized salesperson promotes a company’s products to potential customers. For example, a missionary salesperson working for a food manufacturer might visit grocery stores, discuss products with retailers, and help display products, without actually being responsible for the sale to consumers.
The sales process begins with identifying potential customers, called prospecting. This also involves an activity called qualifying, or finding out if a sales prospect has the need and the income to become a customer. The information collected during the prospecting and qualifying stages of the sales process is important to the next step of the sales process: the approach, or the salesperson’s initial contact with a prospective customer. The information gathered during the prospecting and qualifying stages is used to customize the approach to meet the customer’s needs. The seller gives a presentation describing a product’s main features and benefits and relates these to the customer’s need or problem.
After the seller has delivered a presentation that has expressed how the product will satisfy the buyer’s needs, the buyer has an opportunity to respond with any expressions of resistance to the sale. The buyer may resist the price of the product, for example, or the seller’s assessment of the buyer’s needs. After the buyer and seller have satisfactorily addressed issues surrounding the sale, the communication usually ends with the salesperson asking the customer to make a decision about the purchase. If the customer does purchase the item and the product is delivered, the seller follows up with the customer to see if he or she will become a repeat customer. The goal of the follow-up activities is to build long-term relationships with customers.
As personal selling has become more prevalent, an arrangement known as relationship selling has evolved. Relationship selling involves establishing a relationship between the seller and buyer through regular contacts over an extended time period. Another type of personal selling that has evolved in recent decades is one that promotes a product by teaming up salespeople with specialists from other areas in a business, such as technology, design, or product development. This type of sales strategy is useful in situations that require detailed knowledge of new, complex, and rapidly evolving technologies.
Another recent trend in selling is the use of computer applications to make sales functions more efficient and competitive. Sales force automation (SFA) and sales force management (SFM) are terms for computer systems that support a company’s sales functions, including developing contact lists, sales proposals, and the stages of strategic sales efforts. The benefits of these systems include easy access to information about a company’s inventory and its sales prospects. They also provide sellers with up-to-date information about products and help sales managers share market-research information.
These systems not only help improve the effectiveness of a sales force, they also enable a sales team to communicate with other parts of the business crucial to their work, such as finance and product development. In the most developed versions of sales force software, customers can customize their product. This kind of customization is popular within many industries, including the athletic shoe industry and the automobile industry.