Personal entails the face-to-face pitching of a product or service to a prospective buyer. The main thing that sets personal selling apart from other methods of commerce is the intensive inter-personal skills required, given that that the salesperson conducts his or her business with the customer in person.
Personal selling dates back to the Bronze Age. Traveling sales kits made up of bones and stones have actually been found from this era. In the United States, the first salesmen were Yankee peddlers who carried their goods from the east on their backs. They traded clothing, spices, pots and pans, and other household goods to settlers on the western frontier. The father of modern selling techniques is considered to be John Henry Patterson, the head of National Cash Register company. As far back as the late 1800s he was implementing sales training programs, quotas, and sales territories for his sales staff. He also introduced the notion of canned sales talks.
Personal selling is one part of the promotion mix, the various ways businesses choose to reach or communicate with their customers. The main elements in a promotion mix are advertising, sales promotion, public relations, and personal selling. Advertising is any form of paid presentation or promotion that is not done face-to-face, such as television commercials. Sales promotion is the use of incentives, such as coupons, to entice a customer to buy a product or service. Public relations is the act of building up the image of a company in the eyes of the community in the hopes of translating the feelings of goodwill into sales. An example of public relations is a company sponsoring a charity event. The final component of the promotion mix is personal selling, in which a demonstration or presentation to a potential customer is performed in person.
Settling on a promotion mix involves many factors. Businesses may choose to use any or all of the promotion mix tools and must decide how to allocate resources for each component. Some of the things organizations should consider when deciding on a promotion mix are the type of product or service sold, the unit value of the product or service, and the budget allotted for the promotion mix. Of all the industries involved in the promotion mix, the personal selling industry involves the most people. As a comparison, there are about 500,000 people involved in the advertising industry but more than 13 million people in personal selling.
In general, if a product has a high unit value and requires a demonstration, 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 are also primarily sold through personal sales methods. Computers and copiers are good examples of technical products that are best sold through personal sales. Products that involve a trade-in are also best sold through personal selling to help facilitate the trade-in process. Automobile sales often involve a trade-in and almost always involve a personal sales transaction. Finally, an organization that cannot afford an advertising campaign (which is a very expensive endeavor) might consider personal selling as an alternative to advertising. A personal sales force is a relatively inexpensive alternative to advertising, as the primary cost is the sales-force compensation. Since sales-force compensation is largely based on actual sales, a sales force is an investment that requires much less money up front than do other forms of the promotion mix that need time to pay off.
Personal selling as a career is unique and offers many benefits. It is, however, not for everyone. In general it involves long, irregular work hours and extensive travel. A personal salesperson should also be able to handle rejection face to face, which is a large component of the job. On the other hand, personal sales offers great rewards for those who are successful. Because most compensation involves commissions based on completed sales, the potential for income is great. With personal sales, there is no ceiling on what a person can earn, as there is with other salaried jobs. Also, many people enjoy the freedom of flexible hours and the fact that a personal salesperson has little contact with a supervisor. A career in personal sales offers a person the chance to develop interpersonal, communication, organizational, and time-management skills.
Sales-force compensation varies from one organization and industry to another. All compensation plans, however, contain one or more of the following components: commission, bonuses, expense accounts, incentives, benefits, and a salary or draw. Commissions, by which a salesperson is paid a percentage of the sale he or she makes, is the most common type of sales force compensation because it directly ties compensation to performance. Bonuses based on performance are often employed as well. With expense accounts or allowances, some companies will reimburse salespeople for business expenses incurred. Another form of compensation, and one that can be extremely motivating for some people, is incentive prizes earned through sales contests. Cars, trips, cash, and a number of other prizes are offered in exchange for meeting certain sales goals. Many companies offer benefits such as life and health insurance, although these benefits too can be tied to sales performance. Finally, some companies pay a base salary or draw, usually in conjunction with one or some of the other compensation elements. A draw is a fixed amount that is held against a salesperson's future sales earnings. This is usually offered to a new salesperson in order to foster earnings stability while he or she is learning the business. Usually if the salesperson does not make future sales, he or she is not held responsible for the amount.
In general, the tighter the control a company has over a salesperson, the larger the role salary plays in compensation. For example, an IBM salesperson, based in a branch office and receiving extensive training and supervision, may have a large part of his beginning compensation plan made up of a base salary or draw. At the other end of the spectrum you may find a World Book salesperson, based in her home, with little training and supervision. She may never even see a branch office and will be compensated entirely in commissions and bonuses.
Noted industrial psychologist Robert McMurry identified the main types of personal sales jobs:
Although there are many different types of salespeople, they all go through the same basic steps when making a sale: prospecting and qualifying, preapproach, approach, presentation and demonstration, handling objectives, closing, and follow-up. Although training criteria for personal sales forces may vary from one organization to another, most will include some version of these steps.
Prospecting and qualifying involve finding potential customers and determining whether they are in a buying position. Prospecting, or lead generation, can be as simple as asking current customers for names of acquaintances, or as sophisticated as using a database or mailing list. Often the salesperson's company provides leads, but a truly successful salesperson will also be able to generate his or her own leads. Generally, prospecting involves an element of cold-calling—calling an unknown potential customer and introducing yourself and your product. Often this is the least favorite part of a salesperson's job but ultimately one of the most important. In addition to prospecting for clients, a salesperson needs to qualify the customer. Is the potential customer financially in a decision-making position? Does this customer need the product or service? It is not atypical that a salesperson may need to contact many, many prospects before making a sale.
The preapproach is the step salespeople take when they are researching their prospective customer—often another company. They may read up on the company, talk to other vendors, or find out more about the industry. The salesperson will also take time to set sales-call objectives and try to determine the best time to call.
The next step is the approach, which is crucial for a salesperson to start out on the right foot. The salesperson should introduce himself or herself, the company represented, and the product or service being offered. It is also important that he or she 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 canned approach is a tightly scripted talk that is either memorized or read. The formula approach is less rigid and, depending on the buyer's response to some carefully asked questions, will be tailored to meet the customer's needs. The third presentation style is the need-satisfaction approach, in which the seller tries to find out the customer's needs mostly by listening.
Presentations and demonstrations may involve any number of visual aids, such as flip-charts or demonstrations 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, fill the customer's need, and handle objections.
Handling objections is the next phase of selling. Almost every customer will present objections to making a purchase, whether real or not. A good salesperson is not flustered by these objections and handles them in a positive, confident manner. One approach to objections, used frequently with canned presentations, is to simply acknowledge the objection and continue with the presentation. In the more tailored presentations the salesperson can handle the objection by turning them into reasons to buy.
The next step of a sale is often identified by novice salespeople as the toughest step: closing, or asking the buyer to purchase. Some new salespeople are so reluctant to appear aggressive that they never try to close, and the customer may become annoyed and decide not to purchase for just that reason. Customers must be given the chance 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, and asking about price or terms.
The last step of a sale, the follow-up, is often neglected but is important for many reasons. The follow-up can be done in person or by telephone. This 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 encourages repeat business, is a good opportunity to get referrals, and increases the chances that subsequent payments will be made.
The increasing trend toward long-term buyer-seller relationships entails a shift in the concerns of the personal salesperson from influencing buyer opinion and behavior to managing the dynamics of the buyer-seller relationship itself. This process is sometimes called "relationship marketing," and refers to a variety of activities, including building and mediating relationships between businesses. In this "partnering role," the salesperson attempts to keep in check the inevitable conflict of interest that will arise in a long-term relationship in which, for one party to do comparatively better, the other must do comparatively worse. In other words, he or she must use all the personal seller's available resources and tactics to turn this conflict of interest in to a mutual advantage.
Unfortunately, however, personal selling is often perceived as being a less-than-reputable field of work. Unethical salespersons, 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 large personal sales forces have also adopted their own codes of ethics that provide guidelines regarding the type of sales pitch that can be made, the hours a sales call may be made, and the prohibition of incorporating misleading information or pressure tactics to make a sale. Much progress has been made in making personal selling a more reputable field, and efforts toward that goal will continue.
[ Judith A. Zimmerman ]
Marks, Ronald B. Personal Selling: A Relationship Approach. Englewood Cliffs, NJ: Prentice Hall, 1996.
Sellars, David. Role Playing: The Principles of Personal Selling. Orlando, FL: Dryden Press, 1997.
Weitz, Barton A. and Kevin D. Bradford. "Personal Selling and Sales Management: A Relationship Marketing Perspective." Academy of Marketing Science, Spring 1999, 241-254.