Formal Sales Process in Small and Medium Size Enterprise (SME) Essay
Formal Sales Process in Small and Medium Size Enterprise (SME)
History and evolution of formal sales process
Formal sales process refers to sales strategies that provide organization sales management with the direction on how to ensure effective and efficient sales. The process can also refer to the steps taken by the management to ensure satisfaction of customers buying process in a more successful way. Notably, formal sales process allow companies especially Small and Medium Enterprises (SMEs) to enhance their competitive advantage, and ensure effective sales by teaching sales teams how to succeed.
The sales process dates back to ancient times but for the purpose of this study I will be focusing on post World War Two. It is surprising that there is little research on the history and development of the sales process as sales are vital to the survival of business. The earlier sales process models stem from the behavioral model AIDA (Awareness, Interest, Desire and Action) attributed to E. St. Elmo Lewis in 1898. This was developed to help guide the sales force (Kotler 1999; Sheth and Sharma 2008). The sales process is inextricably linked to the buying process, which has developed significantly over the decades. It has changed from a transactional activity into a strategic supply chain function looking to add value to the business (Axelsson and Wynstra 2002; Cousins and Spekman 2003; Ketchen and Hult 2007).
Through the development of the sales process there have been three key changes. The first is the development of the ‘seven steps of selling’ (Dubrinsky 1980) which is based on the AIDA model. The second is the ‘evolving selling process’ (Moncrief and Marshall 2005) which expands on Dubrinsky’s model and brings it up to date, with the advent of the internet and changes in the buying process. Third is ‘value based selling’ (Rackman and DeVincentis 1998) which analyses each element of the sales process, with specific focus on the buyer’s ‘problem’ and the real ‘implications’ of the problem. This model provides focus to the sales process into adding value to the customer.
In their report, Davies et al, highlight the fact that ‘no-one was measuring true sales ability’ and goes on to study the behaviors and skill set of sales professionals. Regarding measurement, Sharma said ‘what gets measured gets improved’ which start to address the critical issues of visibility and what to measure. Neely states, ‘an organization need to identify an appropriate set of measures to assess their performance’ (Neely 2007; p149). Regarding behavior, Covey (1999) talks about responsibility and accountability which is a critical area of any sales process, be it formal or not.
Weather, or not, an organization has a sales process, the world, and customers, are changing and the approach to sales has to change to ensure complacency does not set in (Kotter 1996). The culture and management of an organization will also impact the sales process, and vice versa, in positive and negative ways (Handy 1991). Womack and Jones (2003) are pioneers in lean thinking and believe manufacturing processes and the elimination of waste can be transferred into the back office side of the business including sales.
One of the key themes that have surfaced from initial reading is that sales is a process, which needs to be followed, measured and improved to help increase the sales funnel, or pipeline, in order to grow sales (Miller and Heiman 1994; Zoltners, Sinha and Lorimer 2004; Thull 2010; McClay 2010).
Porter (2004) believes that when working with customers it is important to add value and create a competitive advantage. In addition to this, Doyle suggests that the sales process can add value and create competitive advantage, which will ‘contribute to achieving the company’s objectives of growth and profitability though meeting the needs of the customers’ (Doyle 2002: p.2). When a formal sales process has been implemented, there is much evidence to support that the sales process should be aligned to the sales strategy and to the company strategy (Kaplan and Norton 2006; Johnson, Scholes and Whittington 2008; De Wit and Meyer 2010). In contradiction to the majority, Adamson, Dixon and Toman (2013) challenge the need for a formal sales process and believe the sales function’s approach should be based on insight and judgment.
Effects of a formal sales process on an SME and its people
Selling is a communal as well as a business activity and can be defined quite simply as “making a sale” underpinned by several strategies and personal skills across a range of tasks and promotion situations (TAS Group, 2014).
The sales task within a business is accountable for the vital creation of revenues, delivers financial stimuli and forms the fundamental connection between a business and its customers (McClay, 2010; Moncrieff and Marshall 2005). Moreover, business dealings rely on persons and more so how they transact with customers, making the buyer-seller edge a highly capricious interface. On the other hand, formal sales process is the sales strategies that provide the sales management force with the direction on how to sell. It is the process that allow companies especially Small and Medium Enterprises (SMEs) to scale their sale force by teaching sales teams how to succeed. According to Johnson et al (2006), formal sales process provides the sales management team with a framework from which to manage and enable measurement and continuous improvement of the sales force performance.
More specifically, a formal sales process enables sales managers maintain control over specific sales behaviors as dictated by the system adopted in Small and Medium Enterprise (SMEs). Formal sales processes in the SMEs context help sales management teams. They also help managers understand which measures should be adopted for understanding prospecting, qualifying and performance measurement. Additionally, formal sales processes enable sales managers learn how to replicate good behaviors and eliminate undesirable ones besides recognizing problems before they turn to be major roadblocks (Lii, 2011).
If there is one component of the selling system that is most taken for granted is the sales process. Although executives spend some of their times forming strategies, developing entrepreneurial skills and measuring performance of their employees, they hardly strategize on the formal sales process; that is the activities their salespeople must execute to shift an activity from lead generation to closure (Lii, 2011).
In a broad spectrum, the sales process, be it be formal or informal is the backbone of any sales force. According to Lii (2011), the formal sales process is selling strategy, which was introduced to facilitate a sell-aside process in sells concerning public mergers and acquisition context. Moreover, the sales process is a much more advantageous in the sales process involving Small and Medium Enterprises’ and is quite distinct from the traditional means of executing sales. Notably, for a sales process to be termed as good and successful, the right steps at the right time should be initiated and adopted within the Small and Medium Enterprises vicinity as well as making the right decisions.
As argued by Blair (2005), for the formal process to work in the SMEs, the sales management team should work tirelessly to keep the correct movement in track. This owes to the fact that without a good flow in selling and buying for the prospective customers to follow and for the sales management team to follow, the sales will remain to be low and potential customers may look elsewhere (Blair, 2005). Formal sales process allows SMEs to scales its sales force by teaching its sales people how to success. Contrary to the informal process that is normally adopted by many and characterized by unorganized techniques, formal sales process in SMEs measures and manages the sales force.
Consequently, Sales management teams understand this and strive to develop standard operating strategies for their workforce to follow hence the formal sales process (Johnson et al., 2006). Essentially, the nature of sales process has critically changed. Sales organizations are being reinvented to better address the needs of the changing marketplaces. More evidently, there are different drivers of change in diverse sales organizations that have been identified in reinventing sales organizations and are perceived to help an organization compete successfully in today’s selling environment.
With the use of the formal sales process, different Small and Medium Enterprises (SMEs) have realized a measurable change in the levels of sales they acquire. The formal sales process has enabled SMEs to build long-term relationships with their customers. According to (Dar, 2006),this is because formal sales process is a structured line of attack that enables time-to-time assessment of customer’s value hence focusing on the high- priority customers.
Secondly, formal sales process aids in creating sales organizational structures that are more nimble and adaptable to the needs of different customer groups. It is in this perspective that formal sales process is beneficial in that it enables Small and Medium Enterprises’ (SMEs) compete well in the entire markets when willing to customize their sales efforts to meet their customers preferred ways of doing business (Adamson et al., (2013). In addition, in the modern markets; especially SMEs related markets, flexibility which is important to the formal sales process is viewed as an asset, which can determine the level of sales.
Thirdly, according to Dar (2006), with the adoption of formal sales process, SMEs gain greater job ownership and commitment from sales management team. Moreover, this is only accomplished when the formal sales team removes functional barriers within the sales organization more so by leveraging the teams experience as a whole. More importantly, formal sales process helps shift the sales management style from commanding to coaching. In this, the sales management team and managers create a conducive environment that allows the sales team uses their talents and abilities to secure, build and maintain relationships with the profitable customers.
Davis et al (2011) discuss that for the formal sales process to work efficiently and yield the desired results, the management style has to change. Nevertheless, the other visible formal sales impact on Small and Medium Enterprises (SMEs) is that formal sales process enables leveraging of the available technology for the success of the sales management team ( Dar, 2006). For instance, formal sales have greatly changed the traditional (informal) sales process in that, its adoption leads to adoption of technological tools. Therefore, sales teams that use the available technology well have a strong competitive edge over others. Consequently, firms globally are investing millions of money in technological advancement in the sales sector to help improve their sales performance.
Finally, According to Hayes, (2003), the integration of the formal sales process in then SMEs sales platform encourages the acceptance of better integration mechanisms for sales-team performance evaluations. Essentially, a real weakness of the informal sales process in the verge of the Small and Medium Enterprises SMEs is on how to evaluate and ultimately reward the sales personnel. However, the use and integration of the formal sales process has solved these problems and instead provided well-marked evaluation strategies hence bringing a positive image of the SMEs and works successfully as a strategy for sales
Different sales processes
A sales process or strategy is not all about closing business deals; it is about defining a sales process that vividly reflects the image of the organization or firm, the firm’s customers, the products or services it offers and the solution that it offers in the market. By truly understanding its customers and by desiring to solve its customer’s problems, a business can plan to execute a sales process that will accelerate the likelihood of reaching its ultimate goal (Sales educators, 2006).
According to the sales educators (2006), there is no specific best way to conduct the sales process. A company’s personality and the sales team desire to achieve as well as the firm’s background determines the type of sales technique that best suits its sales endeavors ( Porter, 2004). Even though every company in the corporate world has its own sales methodologies, it is always advised that trying different sales processes is healthier. This is because new sales methods keep a company out of rut and may even work better than expected. Therefore, many salespersons even those operating in the B2B environment use a combination of different approaches (Rackman & DeVincentis, 1998).
The different sale processes mostly utilized by different sales teams include; older takers, inside sales, outside sales, the guru, the consultant, the networker, the hard seller and active sales among others. Most importantly, every sales process is aimed at increasing the sales to the current customers and finding new ones. However, different businesses and organizations deploy numerous sales processes with shockingly ineffective results. In some cases, when sales management teams use more than one sales process, customers are to same point confused by the different methods of every firm and probably cross selling is limited (Neely, 2007).
Sales processes vary significantly according to how much a seller adapts to different selling situations and how much the selling team adapts to customer encounters during the entire sells encounter. According to Neely (2007), among the best sales processes or approaches are the problems solving models, needs satisfaction and consultative selling. Among the three mentioned types of selling processes, in terms of rethinking the sells process, researchers endorse their use to fit any situation on the ground. Neely (2006) argues that consultative selling process is appropriate when the customer is willing to share strategic priorities with the seller and sees the seller as being capable of supporting the customer’s strategic initiatives.
Universally, every business is inimitable, hence it should have exceptional sales process to sell service and manage different customers under diverse conditions (Kotter, 1996). Therefore, sales researchers including sales managers across the world are disturbed by the question on whether business should adopt generic sales processes or implement and strengthen a specific sales strategy. Since business aim at working with the most profitable strategies, studies prove that nonspecific approaches are demanding and possess numerous demerits that include; lack of custom customer profile, lack of metrics that matter, and its association with inflexible business management approaches among others (Johnson et al., 2008). Therefore, sales process needs to be specific.
How a formal sales process can improve performance and competitive advantage?
According to Thull, (2010), sales process is one of the most components of the selling system that for many decades has been abandoned by many Small and Medium Enterprises (SME). The author eludes that failure to effectively execute a well established formal sales process acts as an impediment to performance and successes of the organization. As a matter of fact, sales process is a vital component in an organization that if well implemented can lead to enhanced competitive advantage and performance or an organization. TAS Group, (2014), affirms that sales process is the backbone of an organization and should not be overlooked at any cost.
Notably, most sales managers in many organizations spend most of the time coming up with strategies, building tools, measuring performance and developing skills (Rackman and DeVincentis, 1998). Nevertheless, the author affirms that only a few organizations consider and ensure effective implementation of a well established and organized formal sales process. A sales process in this case is regarded as series of task that must be undertaken by salespeople within an organization to tap and generate opportunities from the lead to closure (Thull, 2010).
In a broad spectrum, sales process is an essential component of any sales force in an organization and if carefully and effectively implemented can impact on the success of the organization even in a highly competitive business environment (Thull, 2010). According to Rackman and DeVincentis, (1998), overlooking sales process within an organization hinders sales performance and output even though the organization sales executive have laid down well established sales strategy, tools, skills and metrics in place. Without doubts, this implies that effective of formal sales process implementation in a SME is a strategy of enhancing the performance or the company (Rackman and DeVincentis, 1998).
More importantly, sales process can be used to improve the competitive advantage of an organization especially when the process is aligned properly with the customer’s target. In this case, effective alignment of the two lead to enhanced competitive advantage through creation of a world class sales force (TAS Group, 2014). Performance of an organization is enhanced by the sales process in the sense that the process provides mechanisms of measuring performance. According to Rackman and DeVincentis, (1998), an organization has nothing to measure if it does not have a process. The author adds that it is difficult improve organization performance if there are no mechanisms of measuring the current performance.
Ultimately, sales process is undoubtedly an effective component in an organization to stir performance as it provides mechanism of determining the current performance of the organization and propose changes that need to be effected to improve the performance in the long run. Essentially, the sales process is critical in SME as it provides a logical framework with various activities, milestones and targets that are used to measure performance (TAS Group, 2014). In this case, an organization which effectively implements sales process is likely to have improved performance. Use of diverse measure in the process of sales process such as calls reports by the salespersons are vital in ensuring they work hard and thus improve the overall performance of the Small Medium Enterprises.
According to TAS Group, (2014), the major focus to enhance the organization performance and competitive advantage is simply ensuring effective alignment; implementation and renewal of sales process faster and efficiently than other competitors. Sales process in some way behaves like manufacturing process. In this case, improving sales productivity within a SME, various measures must be put in place stating from the initial sales stage to the end point (TAS Group, 2014). Development of measures ensures that the sales process adopted and implemented by a particular organization is able to address all the need and expectations of the customers through effective alignment of the buying and selling processes.
The process of formal sales in SME can never be undermined owing in mind that the process aims to ensure a close relationship between the buyers and the sellers through the use of salespersons. Creation and maintenance of a good relationship between the two parties is imperative as it ensure the needs, concerns and expectation of the buyers are addressed in time and thus result to loyalty (Thull, 2010). This in turn helps to improve the performance of an organization since there will be enhanced sales volume. The presence and implementation of formal sales process is evidently a vital component in ensuring organization have close contact with their customers including prospective customers.
In a broad spectrum, development of an effective relationship and alignment of the buying and selling process is crucial in ensuring customer’s loyalty. In this regard, improved customer’s loyalty creates confidence to the organization in terms of increased sales volume and thus enhanced competitive advantage compared to its rivals (Thull, 2010). In addition, the relationship helps the organization to work harder to ensure maximum satisfaction of the customers need and concerns through addressing various challenges facing the process and discovering opportunities that may arise. This also helps to improve the performance and competitive advantage of organizations especially Small and Medium Enterprises.
Essentially, sales process aims to ensure an effective alignment of the salesperson’s selling process with the customer’s buying process. Effective alignment of the two processes is vital to organizations as it ensures needs and expectations of the customers or rather the buyers are met in every step of the buying process. In addition, the alignment leads to an effective and efficient sale in the long run hence improved performance (Porter, 2004).Similarly, if the customer’s needs and expectations are carefully addressed through the sales process, it is more likely that the competitor will not have the opportunity to entice the same buyer to turn to their organization in this way, sales process helps to enhance competitive advantage of Small and Medium Enterprises (Porter, 2004).
A critical assessment of how a sales process aligns with a customer buying process
According to Davis et al, (2011), sales have two different sale view points, that is, the seller’s and the buyer’s perspective. However, the two sale point differs based on their importance. The buyer’s perspective is more essential compared to the seller’s point of view due to the fact that satisfaction of the buyers is the utmost objective of the sales process. Davis et al, (2011), affirms that organizations have to ensure diverse initiatives and means to ensure satisfaction of the buyers needs and expectations as their purchasing power depend wholly on their perception on organization’s effort to ensure satisfaction (TAS Group, 2014).
The buying and selling process are mirror images of each other. Notably, buying process refers to the various steps that current customers use to identify and fulfill their need and expectations (Zoltners et al, 2004). Buying process may vary in time based on the type of product or services a customer want to purchase. However, being short or long, the work of a seller is to ensure buyer or rather customer satisfaction in every step. On the other hand, selling or sales processing is simply the steps or activities that are undertaken by sellers to ensure accomplishment of buyer’s goals, needs and expectations. According to Handy, (1991), buying and sales processes are mirror image of each other in an effective sale. The two processes align together in that they usually start together and end together having common steps or activities between them.
According to Kaplan and Norton, (2006), successful alignment of sales or selling process with the buying process in as essential component within an organization especially SME as it ensure effective and efficient sales. The author affirms that the alignment is based on the way the buyer go from one step to another (buying process), as fast as possible with the aim to find goods and services that satisfy their needs and expectations from the seller, while the seller undertakes and closes all steps with the aim to meet customers or rather buyer’s need throughout the process (Handy, 1991). Dubinsky, (1980/81), suggests that when selling and buying process work together, the result is that sales will be successful and efficient and most importantly, the expectations and the needs of the buyer will be met.
In broad spectrum, the alignment of buying and sales process tends to ensure that every step of buying process correspond to a particular step of the sales or the selling process (Dubinsky, 1980/81). The figure below illustrate how the customer’s buying and salesperson selling processes are aligned to ensure satisfaction of buyers at every step and ensure effective and efficient sales within and organization over a given period of time.
Aligning buying and selling processes
Customer’s buying process
Salesperson selling process
However, if there is no close relationship between the two process (customers’ buying and salespersons selling processes), the entire sales process is likely to be inefficient and ineffective. In this regard, the expectations and needs of the customers will not be fully met by the salespersons. According to Kaplan and Norton, (2006), sellers should be keen during sales process to ensure they do not omit any step or in other words ensure every buying process step correspond with a particular selling process step.
According to Kaplan and Norton, (2006), misaligning the two processes has greater negative impacts to an organization. For instance, omitting a particular step in the sales process that is aimed to correspond to a particular step in the customer’s buying process means that specific need and expectations of the buyers will not be met. This in turn interpret that the customers will turn to other organizations that keen in addressing their needs thus losing their competitive advantage and lead to decline in performance (Dubinsky, 1980/81). Critical assessment of alignment of customer’s buying process and the salespersons selling process brings out the need for SME to adopt and implement an effective sales process within their organization to ensure they meet their customers need and enhance sale, competitive advantage and performance in the long run (Kaplan and Norton, 2006).
Factors to consider when designing, or redesigning, a formal sales process and to make recommendations to the owners of an SME
Traditionally, the sales departments have operated informally, with each sales person acting in their distinct ways that in most cases are non-documented, personally derived and non-measured. With the current escalating competition in terms of sales, price war and technological development and design of new and redesign of the existing formal sales processes is inevitable. In response to these forces, small and medium size enterprises need to plan, implement and control their personal contacts programs in order to achieve sales and profit motives of the firms. Designing of formal sale process is a complex and critical undertaking that requires careful scrutiny and a logical examination in its development since it is core in the success of a business (Rickman and DeVincentis, 1998).
The going concern of a business entity largely relies on the effectiveness and operativeness of the sales processes in place. Small and medium size enterprises exist with a view to making profit and there fore effort should be made to ensure that they remain competitive and retain a reputable status in the market. Due to, the fragility and sensitivity of formal sales process design and redesign, several factors should be put into considerations in order to safeguard the successful life of the firms.
For instance, competencies and skills available in the firm, encompasses the qualification and experience of employees especially management and the Sales department staff. For example the less experienced low level manager spend most time in staffing, monitoring and giving directives to salespersons. The top managers on the other hand, are generally concerned with complex issues of planning, budgeting organizing and coordinating sale strategies with other objectives of small and medium size enterprises. The new design should accommodate the available skill and technology.
In the event of limitation of the part of staff qualification, it is worthy to reconsider redesigning the sales strategies, to make them possible to implement operate and eventually achieve the objectives set by the management. According to Lodato (2006), business sale strategies should be implemented with efficiency with the sole priority of increasing sale despite the completion from rivals.
Further more, a look at the geographical coverage and the nature of clients helps determine the correct direction to take. Expansion of business to include a wide coverage necessitates redesigns of sale s process to incorporate the needs and worried of new clients explored. This is through studying and examining their lifestyles, culture and believes and the consumption behavior (Tas Group, 2014).The formal redesign will be there fore necessary in as a way of reinforcing new ways of behavior. Additionally, the sales price and the customers’ economic status should be put into attention. It is worth noting that people consumption pattern entirely depends upon their social economic position and the value of goods and services offered in the market.
Visions of the firm should not be trodded underfoot in the process of designing and redesigning the firm’s formal sale process. The necessity of vision and plan in implementation of firms’ objectives is immense (Porter, 2004), Incorporating the vision of the firms is instrumental in determining whether or not the existing strategies are sufficient or not and the need to streamline them to preserve attractive culture of internal work. Solely adding more marketing and sales people is not sufficient .however it should be back up by the firms operational capabilities may produce sale revues needed to increase continuous growth and improvement.
Other issue to reflect in designing of formal sales process (FSP) is the workers’ motivation. The current level of employee’s inspiration should be assessed and its effectiveness determined. According to Lauby (2005), motivated workers are highly productive compared to their counterparts irrespective of the qualification and skills possessed. There for the factor that drives employees to their peak performances are determined, followed by implementation of the motivation program. Since not every employee is motivated by the same thing, there is need to include diverse programs ranging from bonus pools individual recognition rewards and group performance acknowledgment. This makes workers feel appreciated for the job well done (Lauby, 2005, p.291)
With a view to improving the sale level with business organizations, the manager and owner need to make realignment and readjusted of the operations within the entity and incorporate mechanisms to link product buying process and formal sales process. Majorly, emphasizing on the competence of sales and marketing staff to ensure the easy and efficient implementation of developed marketing strategies at all level of business operations.
Recruiting personnel with high qualification that met the current market demands and cope with the stiff competition. The owners should use this as a competitive advantage to maintain their status and reputation. Additionally they ought to explore the nature of their customers with respect to culture, social economic and consumption behavior and pattern especially in new markets discovered. Moreover, the owners should institute programs aimed at motivating the workers. Establishing individual and group recognition reward will make employees feel acknowledged for their work well done and as a result stimulate their peak performance.
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