Sales in Business

Sales is the business of selling goods or services. Often referred to as personal selling, sales involves communicating with potential customers, informing them about certain products, and persuading them to buy. Most companies employ salespeople to handle sales efforts. Many other people—including secretaries, mechanics, and executives—also help sell a company’s products.

Sales is one of the most important business activities. A company cannot earn money unless people buy its products. An effective sales force benefits other people in the company. The more the company sells, the more it needs to produce or provide. Increased production, in turn, creates jobs and benefits the economy as a whole.

Sales is just one part of a process called marketing. Other steps in the marketing process include market research, product development, pricing, and advertising. Advertising and sales are similar because both operations are aimed at trying to persuade people to buy products. But advertising and other forms of sales promotion are generally aimed at a wide audience. Sales, on the other hand, involves two-way communication between a salesperson and a customer. Personal selling efforts enable the buyer to ask questions about a product and to receive additional information about it immediately. Through advertising, a company can reach large numbers of people. But personal selling is more effective at persuading individuals to buy.

Sales has been practiced for thousands of years, and it has played an important role in the economic development of many nations. Through the centuries, salespeople have helped persuade people to buy new and better products. For example, many people balked at purchasing automobiles and television sets when they were introduced. But after extensive efforts to sell those inventions, they became widely accepted.

Kinds of selling

Consumers, both individuals and organizations, buy products chiefly from shops, supermarkets, department stores, and other retailers. However, in many cases, a product is bought and sold several times before a consumer finally purchases it. Typically, manufacturers sell products to business firms called wholesalers, who sell the goods to retailers. The retailers, in turn, sell the products to consumers.

Selling by manufacturers. Manufacturers generally use salespeople to sell their products to other manufacturers, to wholesalers or distributors, or to retailers. Some manufacturers sell directly to customers who purchase products in large amounts. Sales representatives for a manufacturer must have thorough technical knowledge of the items they sell. They also must know their company’s prices, terms of delivery, and other policies.

Wholesaling. Wholesalers generally sell products to retailers and to large-volume customers such as industrial corporations. Most wholesalers buy products from a number of manufacturers and concentrate on assembling different brands in one category of product. For example, a grocery wholesaler might buy cornflakes, shredded wheat, and other breakfast cereals from several makers.

Most wholesalers employ sales representatives who travel to retail stores. These salespeople provide information on their products and try to persuade retailers that those products will appeal to consumers. Wholesalers must know what items the store needs, the brands that are available, and the terms under which the products are sold.

Unlike retail salespeople, who usually deal with one buyer at a time, sales representatives for wholesalers and manufacturers may have to persuade several individuals in a business to buy the product. In a department store, for example, the funds available to buy clothing may be split between the men’s clothing buyer and the women’s clothing buyer. The salesperson who sells clothing to the store may have to please both buyers before a single sale can be completed.

 

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In some cases, the sales agent must persuade members of a buying committee to choose the product. Some members may be concerned chiefly with how customers in their own department will react to the product. Others may be more interested in reducing the price. In such cases, the salesperson must gear the sales approach to satisfy all members of the committee.

Retail selling. Retailers sell directly to final consumers. Unlike salespeople for manufacturers and wholesalers, most retail salespeople do not usually call on their customers. Many work in stores and wait for people to come to them. They help customers chiefly by answering their questions. Retail salespeople need to know what products the store carries, where to find them, and how much they cost. They must also know how to operate a cash register, handle money and make change, and wrap packages.

Other types of selling. Some salespeople sell to consumers by going to potential customers’ homes or offices. Insurance, for example, is sold in this way by people called insurance agents. Many houses are bought and sold with the help of salespeople known as real estate agents. Salespeople called stockbrokers help people buy and sell stocks. Stockbrokers and other financial services salespeople conduct much of their business over the telephone and the Internet. Other salespeople use direct sales techniques to sell products door-to-door or through parties in people’s homes.

Steps in selling

Although there are many kinds of salespeople, most personal selling efforts follow the same basic steps in making a sale. These steps are (1) prospecting, (2) preparation, (3) presentation, (4) persuasion, and (5) postsale services. In many cases, these sales steps tend to overlap.

Prospecting is the process of identifying possible customers, who are called prospects. In prospecting, salespeople look for individuals who meet certain requirements. In particular, prospects should have the means to buy a product, the authority to buy it, and the desire to buy it.

People with the means to buy a product may have the cash to buy it. Or they may have a good credit rating, which would enable them to buy the product on credit or to borrow money for the purchase.

People with the authority to buy a product are those who are legally permitted to do so. For example, people under a certain age are not legally allowed to buy alcoholic beverages. Only adults have the authority to make such a purchase.

Good prospects also must have the desire to buy a product. No selling effort can make people buy things they do not want. An individual who has just purchased an automobile, for example, probably is not a good prospect for another one. An essential element in prospecting is the identification of the customer’s needs and desires. A salesperson seeks to understand the specific characteristics of the customer, as well as the problems the customer wants solved and the needs the customer wants satisfied.

Salespeople use different methods of prospecting, depending on the type of selling involved. In a retail store, for instance, salespeople do not seek out potential customers. Generally, prospects come to them. On the other hand, sales agents who work for manufacturers, wholesalers, or service providers generally need to search for possible buyers. These agents may consult telephone directories, the Internet, lists of past customers, and other sources to find businesses that might want their products.

Real estate and insurance agents also seek out prospects. However, they use different methods because most people buy real estate and insurance only once every several years. As a result, these agents often look for prospects by reading wedding and graduation announcements in newspapers. Newlyweds, college graduates, and new arrivals in a community are good prospects for insurance policies or new homes. Lists of newly issued building permits and of recent house purchases can also serve as sources of prospects.

Salespeople also learn about prospects from other people. They often ask buyers for names of other people who might be interested in or need the product.

Preparation. Salespeople devote much time and effort to preparing to meet with a prospect. They use several techniques to learn about prospects and their needs. Previous sales records may indicate whether a prospect has bought certain products in the past. By studying such records, salespeople may be able to learn whether the customer was satisfied with the purchases.

Salespeople can also learn about prospects by simply observing them. Observation often permits a salesperson to concentrate on a product that a customer is likely to accept. An automobile dealer, for instance, may see that a person’s current car is a fuel-saving compact. After such an observation, the salesperson could assume the customer would want to replace his or her old car with a similar, new one. As a result, the salesperson may concentrate on showing the prospective buyer fuel-efficient cars instead of models that use a lot of gasoline.

In preparing to present a product to a prospect, salespeople must also learn about the product itself. In this way, they can emphasize the features that would be most appealing to prospective buyers and that would benefit them most. By learning about the product, the salesperson acquires the information necessary to answer any questions that the customer might have. Salespeople also study competitors’ products so they can stress the ways in which their product differs from, and is superior to, those of their competitors.

Before meeting with prospects, most salespeople rehearse their presentations. They may study videotapes or tape recordings of their presentation to see if they appear nervous, wordy, or unsure of themselves. Or they may practice in front of a mirror to ensure that they use appropriate gestures and facial expressions. They also may make the presentation to a friend, another salesperson, or to their sales manager.

Presentation. A sales presentation generally follows a three-step outline: (1) recognition of the prospect’s needs, (2) demonstration that the product offered will satisfy those needs, and (3) asking for the purchase. But a presentation must be more than an outline. It must be interesting and lively. It also must emphasize the most appealing features of the product and show how it will benefit the prospect.

Salespeople use a variety of techniques in presenting a product. They may show videocassette recordings, computer presentations, slides, or photographs of people using the product. Or they may produce written statements received from customers who were satisfied with the product and recommend that others try it. Such documents are called testimonials. Many salespeople also have catalogs that provide pictures of the products and information about them.

In some cases, the salesperson can demonstrate the product itself. To show how a compact disc player works, for example, a salesperson can play a CD on it. Demonstrations can also serve to prove the salesperson’s claims about a product. For instance, a piece of cookware that is said to be unbreakable can be dropped on the floor to show that it does not break. If the product is too big or too heavy to be carried, the salesperson may use a model of it in the presentation. Samples are useful in selling such goods as foods and textiles.

Persuasion. Many prospects do not immediately agree to buy a product. Instead, they offer some objection to doing so. Through experience, a salesperson learns to recognize the type of objection being offered. In many cases, the objection is only a way of delaying the decision to buy. The prospect may be afraid that the product will not be satisfactory and so hesitate to purchase it. In such cases, the salesperson continues the presentation in the hope of overcoming the prospect’s reluctance. The salesperson tries to convince the prospect that such doubts are groundless and that the buyer will, in fact, benefit from the product.

One method of overcoming reluctance is to grant prospects a trial period for using the product. Under such an arrangement, the customer can buy the product immediately. But if the buyer is not satisfied with it, he or she can return the product within a certain length of time and receive a full refund.

In some cases, the prospect’s objection is actually a request for more information about the product, and the salesperson should try to provide it. For example, a customer at an automobile dealership may have expressed interest in a certain model but object to the colors of the cars displayed in the showroom. Such an objection may actually be a request for more information on what colors are available.

In other cases, the objection to buy the product will be final—that is, the prospect cannot buy the product or has definitely decided not to do so. At this point, the salesperson can only end the sales effort gracefully.

The success of a persuasion effort relies heavily upon the salesperson’s knowledge of the product. It also depends on the salesperson’s ability to use the proper words to convince the customer to make the purchase.

Postsale services are the tasks a salesperson performs after a sale has been made. It is important for the salesperson to keep the customer satisfied and to encourage future sales. The salesperson documents the sale and gives the buyer a receipt or a copy of the sales agreement. A receipt indicates that the buyer has become the legal owner of the product. A sales agreement documents the terms and conditions of the sale, as well as any obligations assumed by the seller or the purchaser. If the purchase was made on credit, the salesperson forwards the sale information to the company’s accounting department so that the customer can be billed. The information also serves as a record of the purchase so that stocks can be replenished, and it can be filed for future reference.

For certain products, salespeople must make plans for the goods to be delivered to the buyer’s home. They may also have to arrange for the buyer to obtain a warranty or operating instructions for the product. Postsale services may also involve offering to maintain or repair products when needed.

Regulation of selling

Most nations have laws and regulations regarding sales practices. These measures are usually aimed at ensuring that both the buyer and the seller are treated fairly. For example, there are laws that seek to prevent salespeople from lying to prospects about the nature of the product or the way it performs. Certain laws also prevent companies from failing to deliver a product that has been ordered or from delivering a cheaper version of the product. In the United States, selling is regulated by the Federal Trade Commission (FTC) and other federal agencies and by various state and local agencies.

Certain salespeople are required by law to obtain licenses. Real estate agents in the United States, for example, must pass a written examination on their knowledge of real estate to receive a license. Salespeople who sell products on sidewalks and other public property may be required to have licenses. Strict regulations typically govern the sale of potentially hazardous products, such as guns and chemicals.

Selling may also be supervised by private organizations. Better business bureaus and local associations of business people establish standards of conduct that protect buyers from unfair or deceptive sales practices. Certain trade associations also oversee selling practices. Most companies also have policies designed to ensure that their salespeople use responsible, fair selling techniques.

History

The rise of sales. Selling has been practiced for thousands of years. The earliest remains of prehistoric peoples indicate that they traded various products. For instance, hunters could trade food for utensils and other goods. Similarly, pot makers could trade pots for food. By trading with each other, both individuals would benefit. In the course of trading, these early bargainers probably used many of the basic principles of selling.

Many of the earliest writings are sales orders and other commercial records, indicating that ancient peoples had already developed complex trade networks. After the development of money in about the 600’s B.C., people could sell goods without having to exchange them directly for other goods. As a result, trade expanded and so did selling.

From about the A.D. 400’s to the 1100’s, however, little trading or selling took place in Western Europe. Most of the people made everything they needed at home. They grew their own food, and they made their own clothing and the tools they needed for their work.

As towns began to grow in the 1100’s and 1200’s, some townspeople began to specialize in making certain goods. Cobblers made shoes, tailors sewed clothing, and metalsmiths created tableware and jewelry. Some of these tradespeople produced large quantities of goods for merchants to sell across wide areas. Some merchants opened stores. Others traveled far and wide to buy, sell, and trade.

The Industrial Revolution of the 1700’s and early 1800’s increased the importance of selling. During the Industrial Revolution, machinery replaced much hand labor. Machines produced items more quickly and more cheaply than people could make them by hand. Soon, goods that once only the rich could afford were so inexpensive that common people could buy them. In addition, many new products, such as the sewing machine, the steam engine, and the reaper, were invented. But people did not start buying merely because goods were available. Instead, they had to be convinced that the products were worthwhile and that they would benefit from owning them. Thus, many manufacturers hired salespeople to promote their goods.

Early sales efforts usually involved peddlers traveling to potential customers and demonstrating their products. These early salespeople often took orders for products to be delivered at a later date. The delay in delivery was due to the inability of salespeople to safely carry sufficient quantities of their products.

The peddler’s life was strenuous, lonely, and hazardous. Some peddlers walked, many rode horses, and a few of the wealthiest had wagons or carriages. Most peddlers spent a great deal of time on the road. When the opportunity arose, many of them were happy to settle down as storekeepers.

Modern sales. As nations expanded and economies grew, the salesperson’s duties and responsibilities changed. Selling became recognized as a profession that required special training and skills. Salespeople became an important link between the customer and the company, helping to settle any disputes that arose. Since 1900, the types of merchandise sold have become more complex and sophisticated. New markets have expanded over large areas, and selling has become increasingly international in scope.

Current trends in sales. Many methods and techniques of selling have continued to develop in the late 1900’s and early 2000’s. The increased use of computers has made the Internet a major force in modern sales efforts. Salespeople can use the Internet to find prospective customers and to gather information about them. Companies can use it to handle customer orders and to respond to questions. Many Internet websites serve as online catalogs where customers can acquire some information about products before talking or meeting with salespeople.

Another modern trend is the increased emphasis on relationship-oriented sales efforts. These efforts seek to develop long-term relationships with customers, rather than focusing on a single transaction. Because of the increased complexity of markets and the focus on relationship-oriented selling, team sales efforts have become more common. In many cases, companies assign formal teams of salespeople to maintain relationships with major customers.

Careers

Careers in sales vary greatly. Some salespeople work in retail stores. Other salespeople communicate with customers primarily by telephone. Some salespeople travel from store to store or office to office, repeatedly calling on the same customers. Still others focus on Internet-based sales efforts.

Many careers in sales offer people an opportunity to be largely their own boss and a chance to earn more money than is possible in many jobs. Selling also provides salespeople with a way to meet a wide variety of people.

Characteristics needed. The personal characteristics that contribute to selling success include empathy, drive, and efficiency. Empathy is the ability to listen to other people and understand their point of view. Drive is, basically, the motivation to succeed. Many potential barriers stand in the way of any given sale. Salespeople must have the persistence to overcome those obstacles. Efficiency is the ability to use time wisely. For example, salespeople must make careful plans in order to reduce their time on the road, their waiting time to see a prospect, and their time out of the office.

Training. Sales training begins before salespeople meet their first prospect. Before attempting a sale themselves, beginning salespeople often accompany an experienced salesperson to see how sales are actually conducted. Training continues throughout a salesperson’s career. Salespeople must keep abreast of products, including those from their competitors, and of new sales techniques. To do so, they attend special classes from time to time and read a variety of books and journals.