Sales management principles and practices

Johnson Drug Company needs to address the important issue of goals and objectives with a view to assisting the sales force in its training and performance. By changing the sales system without providing adequate training translates into lack of motivation and hence lower performance. For this reason, the company must first address key issues like the issue of compensation and training because a properly motivated sales force can make or break the new drug service system. The company is "heavily dependent."(p. 524) on the success of its new strategy but it has failed to consider training aspect of sales management.

Johnson Drug Company is not a new firm in the field and hence it can be assumed that it already enjoys a solid relationship with retailers. Since it has been in operation since 1875, the company understands the market and also the competitors very well. This understanding of the environment is the key to company's success. The company has developed an interesting product which it calls the service system for pharmaceutical clients. This product can help retailers increase their productivity and efficiency but Johnson Drug Company needs to have a more trained sales force to sell this system effectively.

Problems:

The lack of training and experience is one thing that company needs to address seriously. Without adequate experience in the area of sales, it is unlikely that sales personnel would be able to meet the company's targets. However this can be compensated with adequate training, especially training in the area of product awareness and client needs can bridge the experience gap. But company must not ignore experience when hiring sales personnel.

Company should review its hiring process and selection criteria. Sales force must be selected on such things as abilities and past experience. More importantly it is the aptitude which counts. If personnel without the aptitude for sales are hired, this can translate into poor organizational performance.

The compensation plan must also be revised. The company is placing a great deal of emphasis on monthly sales reports that are submitted by each salesperson and other factors are not being considered. This means that sales manager is not assessing each sales person's strengths and rewarded them properly because he is taking into account the extra hours put in, the dedication of and the effort made by each sales person even though the sales report may not reflect it and this can lower the morale of the sales force.

Secondly the company doesn't focus on training the staff to build relationship with the clients. Instead too much emphasis is placed on selling certain units of the system which means that the sales force doesn't have the time or motivation to build positive connection with the retailers. And since a straight commission plan is in place, sales personnel know they are not being rewarded for building relationships and hence they do not even try. This is a faulty commission practice and must be altered.

It has also been noticed that this service system requires a more trained sales force because retailers need to understand why they should purchase this system and how it would help them. However since the sales force lacks proper knowledge of the system, they are not doing a great job in selling the system. They are focusing more on selling more and more units, instead what they should be focusing are the capabilities of the new system so they can communicate effectively with the retailers and highlight the benefits of this new product.

What Company Needs to Do:

Now that we understand the basic problems with the new sales strategy, we can make some recommendations about what the company needs to do in order to motivate its sales force and make it more efficient and effective.

The first important thing is to have a better training program in place. The company should provide training not only about how to sell a unit, but must also focus on the key components of the system thus making sales people more knowledgeable about the products. They need to understand how the system works, why it is better and what other options are available in the market. So every often, the retailer would be aware of other similar products in the market and if client brings up other products, the sales people should know why their product is better. This can only happen if they know of other products.

Even though the training program would be an additional financial burden, still the rewards and benefits can be enormous. In the light of what it can do for the company, it is safe to say that some additional cost should not be used as an excuse to ignore training. Not only does training make sales people more effective, it also gives them a sense of self assurance and confidence which automatically draws people to them because their body language would be able to communicate their knowledge and will make the product more attractive.

Secondly with training, the staff would also be able to address the needs and problems of their clients. If the clients have any problems with the system or with their sales management in general, the sales people can help them identify the root cause and hence build a more positive relationship with the clients. This is extremely important for giving the company an edge over its competitors.

Sales manager's role and responsibility also need to be reviewed. It is not enough to base compensation on sales report only. Sales manager must interact with sales personnel to be able to find out what problems they are facing and what are they doing apart from selling the units. This way the manager can discover any serious obstacles in the way of selling systems and hence can work on that problem in order to facilitate the process. Manager should also understand that sales people may actually be doing more work than the sales report reflects. They may not be able to sell enough units, but this could be due to a variety of reasons and not just lack of hard work. Some sales personnel may actually be working very hard but factors beyond their control may be affecting final sales such as issues with the use of the new system, improper knowledge of how the system works or availability of cheaper options in the market.

The company also needs to re-examine and revise the compensation plan as suggested before. There are few options available to the company. It can keep the same plan but that would only add to the problems. Straight commission program is also faulty since it takes into account nothing but units sold which doesn't compensate the sales people for extra work and effort made by them in other areas. This can lead to extreme frustration and lower morale.