Personal selling is the process of communicating with a potential buyer (or buyers) face-to-face with the purpose of selling a product or service. The main thing that sets personal selling apart from other methods of selling is that the salesperson conducts business with the customer in person. Though personal selling is more likely to be effective with certain types of products or services, it has important applications for nearly all kinds of small businesses. In fact, most of history's successful entrepreneurs have been skilled salespeople, able to represent and promote their companies and products in the marketplace.
Personal selling is one part of a company's promotion mix, along with advertising, sales promotion, and public relations. Advertising is any form of paid sales presentation that is not done face-to-face. Television and radio commercials, newspaper and magazine advertisements, and direct mail inserts are well-known forms of advertising. Sales promotion is the use of incentives—such as coupons, discounts, rebates, contests, or special displays—to entice a customer to buy a product or service. Public relations is the act of building up a company's image in the eyes of the community in the hopes of translating the feelings of goodwill into sales. An example of public relations might include a company sponsoring a charity event.
Personal selling offers entrepreneurs both advantages and disadvantages in comparison with the other elements of the promotion mix. On the positive side, personal selling allows the salesperson to target the message specifically to the audience and receive immediate feedback. In this way, it is more precise than other forms of promotion and often has a greater persuasive impact. Conversely, personal selling cannot reach as many potential customers as advertising, plus the cost of each contact is much higher. Another advantage is that personal selling can be an important source of marketing information. Salespeople may learn about competitors' products, for example, or about emerging customer needs that may lead to the development of a new product. If the sales force is well trained—acting as problem solvers and advisors for customers rather than using hard-sell tactics—personal selling may help a small business build loyal, long-term relationships with customers.
A small business may choose to use any or all of the promotion mix elements in selling its products. Deciding how to allocate resources for each component involves a number of factors. Some of the things entrepreneurs should consider when deciding on the ideal promotion mix include the type of product or service, the value of the product or service, and the budget allotted for marketing.
WHEN TO USE PERSONAL SELLING
In general, if a product has a high unit value and requires a demonstration of its benefits, it is well suited for personal sales. For example, an encyclopedia is a high-priced item and most people do not feel they need one. After a demonstration, however, most people agree it would be a useful item to have. Therefore, encyclopedias are well suited to a promotion mix that emphasizes personal selling. Highly technical products, such as computers and copiers, are also primarily sold through personal sales methods. Products that involve a trade-in, like automobiles, are usually handled through personal selling to help facilitate the trade-in process. Finally, a company that cannot afford a mass-advertising campaign might consider personal selling as an alternative to advertising. Since sales force compensation is largely based on actual sales, personal selling may require less money up front than other parts of the promotion mix.
One method that many small manufacturers and wholesalers use to reduce the costs of personal selling—which can be the most critical aspect of the promotion mix for these types of businesses—is to hire an experienced selling agent. Selling agents are independent salespeople who work under contract with one or more companies and are usually paid a straight commission on sales. Hiring a selling agent allows a small business to save the time and money it would have to invest in recruiting and training an in-house sales force. In addition, an agent with experience in selling similar products may provide readymade customers and quick entry into a sales territory. Selling agents are particularly helpful for businesses whose products experience seasonal or fluctuating sales, since they are only paid for the sales they make.
The main disadvantages of selling agents are that they usually work for several different firms, so they are unable to devote 100 percent of their attention to any one client, and that it may be difficult to retain the customers gained in this way once the relationship with the agent is severed. It is also difficult to control the selling methods used by agents, and they may not be able to provide the service that some customers require.
TYPES OF SALES POSITIONS
There are many different types of personal sales jobs. A driver-salesperson merely delivers the product and has few selling responsibilities. An inside order taker—such as a sales clerk in a retail store or a telephone representative with a catalog sales company—takes orders from within a selling environment and requires some selling skills. In contrast, an outside order taker goes to the customer's place of business to take orders. Some selling skills are required in this position, especially to establish new accounts. A missionary sales person, rather than selling an actual product or service, instead tries to make a customer feel good about the company and products he or she represents. The pharmaceutical and liquor industries frequently employ missionary salespeople.
A sales engineer might be found in technical industries such as computers and copiers. Sales engineers provide technical support, explain the product, and help adapt the product to the customer's needs. Finally, a creative salesperson may attempt to sell goods (such as vacuum cleaners or encyclopedias), but more often represents ideas, such as services (insurance) or causes (charities). These salespeople usually deal with customers who are unaware of their need for the service or product, so they must possess the most developed selling skills of all the types of salespeople.
STEPS IN COMPLETING A SALE
The many different types of salespeople all go through the same basic steps when making a sale: prospecting and qualifying, preapproach, approach, presentation and demonstration, handling objections, closing, and follow-up. Although training for personal sales forces may vary from one organization to another, the majority of the training will include some version of these steps.
Prospecting and qualifying involve locating potential customers and finding out if they are in a position to buy. Prospecting, or lead-generation, can be as simple as asking current customers for names of acquaintances who may also be interested, or as sophisticated as using a database or mailing list. Often the company provides leads, but a truly successful salesperson will also be able to generate his or her own leads. Prospecting usually involves an element of cold-calling—that is, calling an unknown potential customer and introducing oneself and the product. After possible customers have been located through prospecting, a salesperson must qualify them. This entails assessing their readiness and ability to buy. Personal selling almost always requires a salesperson to contact many prospects before completing a sale.
The preapproach step involves researching the prospective customer—often another company. The salesperson may read up on the company, talk to other vendors, or study the overall industry. At this stage, the salesperson will also try to determine the best time to make the sales call and establish sales call objectives. During the next step, the approach, it is crucial for a salesperson to make a positive first impression while introducing himself or herself, the company represented, and the product or service being offered. It is also important that the salesperson listen carefully to the prospect and respond appropriately.
Once the approach has been made, the salesperson should be ready to launch into the demonstration or presentation. Depending on the company and the product or service, there are generally three types of presentations. The prepared or "canned" approach involves a tightly scripted talk that is either memorized or read. The formula approach is less rigid. Depending on the buyer's response to some carefully asked questions, the seller will go to a formula presentation that he or she hopes will meet the customer's needs. The third presentation style is the need-satisfaction approach, in which the seller tries to uncover the customer's needs, mostly by listening. Presentations and demonstrations may involve any number of visual aids, such as flip-charts, or samples of the products themselves. One of the keys to a successful presentation is product knowledge. The more the salesperson knows about the product or service, the more relaxed he or she will be, and the more able to answer questions, shape his or her presentation to address customer concerns and desires, and handle objections.
Handling objections is the next phase of selling. Almost every customer will present objections to making a purchase. A good salesperson is not flustered by these objections and handles them in a positive, confident manner. One approach to handling objections, used frequently with canned presentations, is simply to acknowledge the objection then continue with the presentation.
The next step in the process of completing a sale—closing, or asking the buyer to make a purchase—is often identified by novice salespeople as the toughest step. In fact, some new salespeople are so reluctant to be perceived as aggressive that they never try to close the sale. Consequently, the customer may become annoyed and decide not to purchase just for that reason. Customers must be given the opportunity to purchase. Salespeople need to learn to look for signals that a closing is appropriate. Common signals that customers give include asking questions, making comments, leaning forward or nodding, or asking about price or terms.
The last step in completing a sale—following up—is often neglected, but is important for many reasons. The follow-up, which can be done in person or by telephone, gives the customer the chance to ask questions and reinforce his or her buying decision. The salesperson can review how to use the product, go over instructions and payment arrangements, and make sure the product has arrived in proper working order. This step ensures repeat business, is a good opportunity to obtain referrals, and increases the chances that subsequent payments will be made.
IMPROVING THE REPUTATION OF PERSONAL SELLING
Personal selling involves specific steps, requires training and experience, and employs some highly talented people. Unfortunately, personal selling is also commonly perceived as being a less than reputable field of work. Unethical salespeople, aggressive or hard sell tactics, and misleading sales pitches have made many buyers wary of personal sellers. Fortunately, much has been done to address this issue. Selling associations such as the Direct Selling Association have adopted codes of ethics that dictate standards of behavior that all members are to follow. Most organizations with personal sales forces also adopt their own codes of ethics that provide guidelines regarding the type of sales pitch that can be made, and the hours during which a sales call may be made. Many companies also prohibit the use of misleading information or pressure tactics to make a sale.