Managing Personal Communications: Direct and Interactive Marketing, word of Mouth, and Personal Selling
I.  Chapter Overview/Objectives/Outline
A. Overview
New technologies combined with subsequent changes in consumer behavior as they leverage the new technologies have presented organizations with challenges and opportunities. The challenges include the ability to remain competitive in adopting technology into the interactive marketing effort. Consumers have raised their expectations of what business should be doing to interact with their customers. 24/7 with instant access for not only transactions but also distribution of products in an expeditious manner is becoming the norm. Organizations must keep up with advancing technology to stay even with the competition. This includes hardware, software and methodologies. The Internet has aggregated customers. Buzz and Viral marketing can extend positive as well as negative information about a company and its products and services. Companies are attempting to quantify what is being said in the social media environment (e.g. Facebook, Twitter, blogs, both company and non-company sponsored or managed). Word-of-Mouth can be a powerful marketing strategy as it comes from the consumer and not the company. Companies need to measure the value of Word-of-Mouth in an effort to determine how much to spend to promote Word-of-Mouth.

Companies need to evaluate how well they have integrated their consumer interaction channels. Timely flows of information from one interactive channel to the next are necessary to meet consumer expectation. This means that a company’s Direct Mail, Inbound and outbound telemarketing, Internet, and brick & mortar methods of interaction should be integrated to ensure customer’s expectations are met. This may also include the integration of all value chain members.

But companies must also pay attention to privacy and ethical issues as these become more pronounced the more companies and consumers interact.
Most companies use sales representatives, and many companies assign them the pivotal role in the marketing mix. Salespeople are very effective in achieving certain marketing objectives. At the same time, they are very costly. Management must give careful thought to designing and managing its personal-selling resources.
Sales force design calls for decisions on objectives, strategy, structure, size, and compensation. Sales force objectives include prospecting, communicating, selling and servicing, information gathering, and allocating. Sales force strategy is a question of what types and mix and selling approaches are most effective (solo selling, team selling, and so on). Sales force structure is a choice between organizing by territory, product, customer, or a hybrid combination, and developing the right territory size and shape. Sales force size involves estimating the total workload and how many sales hours—and hence salespeople—would be needed. Sales force compensation involves deter-mining pay level and components such as salary, commission, bonus, expenses, and fringe benefits.
Managing the sales force involves recruiting and selecting sales representatives and training, directing, motivating, and evaluating them. Sales representatives must be recruited and selected carefully to hold down the high costs of hiring the wrong persons. Sales-training programs familiarize new salespeople with the company’s history, its products and policies, the characteristics of the market and competitors, and the art of selling.
Salespeople need direction on such matters as developing customer and prospect targets and call norms and using their time efficiency through computer-aided information, planning and selling systems, and inside support salespeople. Sales¬people also need encouragement through economic and personal rewards and recognition because they must make tough decisions and are subject to many frustrations. The key idea is that appropriate sales force motivation will lead to more effort, better performance, higher rewards, higher satisfac¬tion, and therefore still more motivation. The last management step calls for periodically evaluating each salesperson’s performance to help him or her do a better job.
The purpose of the sales force is to produce sales, and this involves the art of personal selling. One aspect is salesmanship, which involves a seven-step process: prospecting and qualifying, pre-approach, approach, presentation and demonstration, overcoming objections, closing, and fol¬low-up and maintenance. Another aspect is negotiation, the art of arriving at transaction terms that satisfy both parties. The third aspect is relationship management, the art of creating a closer working relationship and interdependence between the people in two organizations.
The primary variables for the sales force/management effort include the following: (1) Setting Objectives—Objectives can be general rules for guiding salespeople or more specific expectations for behavior. Regardless, the sales objectives should address the relationship between sales, customer satisfaction, and company profit; (2) Designing Strategy—Strategy requires decisions on sales force structure, size, and compensation. Variations in this mixture are appropriate for differing industries, markets and sales objectives; (3) Recruiting and Selecting—Knowing in advance what characteristics will always produce good salespeople is very difficult. Selection procedures should screen candidates for both ability and retention-related issues; (4) Training Salespeople—Issues in training center on skills such as order taking, order getting, and seeing customers as people who require problem solutions; (5) Supervising Salespeople—Supervision addresses problems in directing and coordinating salespeople’s organization, time management, motivation, and customer relationships; and (6) Evaluating Salespeople—Evaluation requires both qualitative and quantitative measures of sales force performance.
B. Learning Objectives
• Gain an insight into how organizations can leverage direct marketing and interactive marketing techniques to gain a competitive advantage.
• Identify impact of word of Mouth
• Understand the fundamental principles of personal selling.
• Learn the key factors in designing a sales force.
• Work with and understand some of the tools for successful management of a sales force.
C. Chapter Outline
I. Introduction - Marketing communications today increasingly occur as a dialogue as technology and software have enabled the consumer to dynamically interact with a company 24/7.  Various classifications of sales positions ranging from least to most creative types of selling (deliverer, order taker, missionary, technician, demand creator, and solution vendor)
II. Direct Marketing – use of consumer-direct channels to reach and deliver goods and services to customers with reduced reliance of a middleman.
A. The benefits of direct marketing
1. Convenient for consumer
2. Provides information to consumer on products and services
3. Supports relationship building efforts with consumers
4. Allows for more individual targeting and personalization versus mass media
B. Direct mail
1. Can target consumers at different geographic areas or specific to one consumer (i.e., state, sectional center (first three digits of zip code), zip code, zip+4, or specific mailing address
2. Leverages technology to capture and analyze consumer information in forms of data to deliver more personal communications
3. Can create different marketing campaigns for current customers and prospects (never were a customer or are an aged customer with no recent activity). Retention strategy is used for existing customers and acquisition strategies are used for the latter
4. Each business vertical market has best practices of direct mail
5. Provides opportunities to measure lifetime value and word of mouth effects
C. Catalog marketing
1. Use of print to provide consumers with product information and ability to order products
2. Can be supplemented by in-store merchandise if cataloger has retail presence
3. Catalogs can be customized at individual consumer level
4. Business to business catalog marketing supports personal selling effort
5. Business to business catalog marketing is challenged by frequent movement of employees versus consumer residential movement, which can be tracked via ancillary processes such as national change of address and other USPS sponsored capabilities
D. Telemarketing
1. Use of telephone to attract, promote, sell, and service consumers and businesses
2. Recent legislation places constraints on who may be solicited (e.g., do not call list)
3. Inbound telemarketing (receive calls from customers or prospects)
4. Outbound telemarketing (organization initiates calls to customers or prospects
5. Telemarketing functions
a) Telesales - take orders, open, or manage customer  accounts
b) Telecoverage - calling of customers to sustain or improve customer relationships
c) Teleprospecting - generate and qualify new leads either by phone or another channel
d) Customer service and technical support
E. Other media for direct-response marketing (all contain a call-to-action mechanism such as 1-800 numbers, web addresses, brick and mortar addresses
1. Newspapers and magazines can also contain response cards to be placed in mail
2. Radio
3. Direct response TV ads
4. TV Infomercials
5. Billboards (effectiveness enhanced by web addresses as one word may be sufficient for consumer recall versus 10-digit phone number)
6. E-marketing
a) 
F. Public and ethical Issues in Direct Marketing
1. Hard-sell and computerized telemarketing offend consumers
2. Unscrupulous marketers can take advantage of unwary public
3. Marketing communications and offers can be misleading
4. Growing consumer of too much information being collected on consumers
III. Interactive Marketing (leverage Internet for interaction)
A. The advantages of interactive marketing
1. Internet provides marketers and consumers with opportunities for greater interaction and individualization. 
2. Availability of contextual placement, buying ads on sites related to the marketer’s offerings
3. Increase ability to reach consumers and track behavior
4. Individualized messages optimize investment
5. Increases reach cost effectively
6. Online communities precipitate knowledge for companies and consumers
B. Disadvantages of interactive marketing
1. Consumers can opt-out of communications
2. Companies can lose control of the message
3. Online “Clicks” may give companies misleading information. For example, a large number of clicks by a consumer on the web site may be a result of a poorly designed web site.
C. Designing an attractive web site (Table 17.1 defines elements of effective web design)

D. Some of the main categories of Interactive Marketing are:
1. Web sites
a)  Key issues is attracting first time and encourage repeat visits
b) Microsites – Limited area on the web managed and paid for by external  advertiser/company, designed to supplement a primary site
2. Search related ads –
a) Links provided along with consumer search results, fee paid only when link is clicked on by consumer (cost per click correlated with click rank and popularity of keyword searched)
b) Search Engine Optimization has become a crucial part of marketing with greater emphasis creating more effective search ads
3. Display or banner ads
a) Small rectangular boxes containing text and images, which are paid placement. So the larger the audience the higher the cost
b) Consumers only spend 5% of their time online searching for information
c) Interstitials are ads, often video and animation, which pop up between changes on a web site. Consumers often block these ads
4. E-mail campaigns are cost effective but run risk of spamming consumers and thus may be filtered by consumers
5. Mobile marketing growing
a) Major opportunity with cell phones for advertisers to reach consumers on the “third screen”, TV and computer being the other two screens.
b) Mobile apps – “Bite-sized” software programs that can be loaded onto smart phones.
c) Monitoring consumer location allows for location-specific promotions.
IV. Word-of-Mouth (WOM) (key aspect of social networking, e.g. MySpace and FaceBook)
A. Consumers use WOM to share information on products and services
1. Positive WOM may be generated organically but may be managed and facilitated.
2. Paid Media results from press coverage of company generated advertising
3. Earned Media – also called Free Media, is all the PR benefits a firm receives without having directly paid for anything. Not really free as firm invests in products, services and marketing, but expense are not devoted to eliciting a media response.
B. Social Media
1. Means for consumers to share information
2. Useful but cannot be sole source of marketing communication
3. Three main platforms for social media:
a) Online Communities and Forums – may be formed by consumers with no affiliations or by firms
b) Blogs are regularly updated online journals or diaries. Brings people together based on common interests. Consumers create most but some are created by firms. FTC requires disclosure from bloggers if they have a relationship with marketers.
c) Social Networks – consumers looking to connect with others. Current popular networks are Facebook, LinkedIn and Twitter
C. Buzz and Viral marketing try to showcase by creating a splash in the marketplace.
1. Buzz Marketing generates excitement, creates publicity, and conveys new relevant brand-related information through unexpected or outrageous means. Refer to “Marketing Skills: How to Start a Buzz Fire” for more information on how to generate buzz. 
2. Viral Marketing is another form of word-of-mouth or “word-of-mouse” that encourages consumers to pass along company-developed products and services or audio, audio video, or written information to others online
D. Opinion Leaders – society contains cliques and members of each clique tend to interact frequently which facilitate communication but also insulates the clique from new ideas. Malcom Gladwell identifies three factors working to ignite public interest in an idea:
1. Reach the three types of people who can spread an idea like an epidemic, mavens or knowledgeable people, connectors who know and communicate and salesman who possess persuasive power
2. “Stickiness” or expressing and idea so it motivates people to act
3. “The Power of Context” controls whether those spreading an idea are able to organize groups and communities around it.
E. Measuring the effects of Word-of-Mouth (WOM)
1. Intuit classified blogs into several categories velocity, share-of-voice (how much talk occurred), voice quality (what was said and to what positive or negative degrees), and sentiment (how meaningful were the comments)
2. Researcher Keller Fay notes that 80% of WOM occurs offline but many marketers focus on easy-to-track online efforts
V. Personal Selling and The Sales Force
A. Types of Sales representatives -  six positions
1. Deliverer – major task is delivery of product
2. Order taker- inside or behind counter, outside which goes out and  makes calls
3. Missionary – do not takes orders but build relationships
4. Technician – serve as a knowledge resource
5. Demand creator – use creative skills to sell tangible goods
6. Solution Vendor – Consultative selling by providing solutions to solve the customer problem 
B. Personal Selling and Relationship Marketing (refer to Table 17.2 for the Major Steps in Effective Selling
1. Personal Selling steps appropriate for transaction situations
2. relationship Marketing steps required to build long-term customer relationship and ensuing loyalty 
C. Company must develop sales force objectives, strategy, structure, size and compensation. (Refer to Figure 17.1 for a flowchart of steps)

D. Sales Force Objectives and Strategy
1. Objectives - tasks to perform include prospecting, targeting, communicating, selling, servicing, information gathering, and allocating
2. Strategy - approach can be sales rep to buyer, sales rep to buyer group, sales team to buyer group, and conference selling or seminar selling.  A company can utilize a direct (company) or contractual (outside) sales force
3. Direct sales force – full or part-time sales representative that work directly for the selling firm
4. Contractual sales force – external partners who work on commission (e.g. manufacturers’ reps, sales agents, brokers)
E. Sales Force Structure – 3 types. Refer to “Marketing Insight: Major Account Management” for a discussion of a specialized form of sales force structure.
1. Territorial – use when selling one product line to one end-using industry with customers in many locations
2. Product – use when selling many products to many types of customers
3. Market – option similar to product structure
4. Example - Motorola uses four types of sales force structure: strategic market, geographic, distributor sales force focusing on distributors and an inside sales force using inbound and outbound telemarketing. Some companies categorize their large and valuable customers as strategic accounts and create a strategic account management team to manage each of these types of customers.
F. Sales Force Size – A workload approach is one way to establish a sales force size (5 steps)
1. Group customers into size classes according to sales volume
2. Establish call frequencies (# of account calls per year)
3. Multiply # of accounts in each size class by call frequency to arrive at total workload, in sales calls per year
4. Determine average # of calls a sales rep can make per year
5. Divide total annual calls (calculated in step 3 above) by the average annual calls made by a rep (calculated in step 4 above) to see number of reps needed
G. Sales Force Compensation – Quantify four components of sales force compensation
1. Fixed compensation
a) Salary satisfies need for income stability
b) Common in jobs with a high ratio of non-selling to selling duties and jobs here the selling task is complex and requires teamwork
2. Variable Amount
a) Commissions, bonus, profit sharing, serve to stimulate and reward effort
b) Works best where sales are cyclical or depend on individual initiative
c) Attracts High performers, but they may emphasize selling at the expense of the relationship
3. Expense Allowances - Enable sales reps to meet expenses of travel and entertainment
4. Benefits – such as paid vacations provide security and job compensation
5. Combination plans feature benefits of both while limiting their disadvantages
VI. Managing the Sales Force (see figure 17.2 for sales management steps)
A. Recruiting and Selecting Sales Representatives
1. What makes a good sales representative? One survey shows 25% of reps generate 52% of sales
2. Average sales rep turnover for all industries s almost 20%. Turnover leads to:
a) Lost sales
b) Expense of finding new replacements
c) Increase pressure on existing reps to pick up slack
3. Recruitment procedures
a) Solicit names from existing reps, agencies
b) Recruit from colleges
c) Length of time and expense varies by organization
d) Universities are collaborating with firms as they develop sales training programs within their curriculum
4. Applicant-rating procedures
B. Training and Supervising Sales Representatives – Median training period is 28 weeks in industrial – products firms, 12% in service firms, 4% in consumer-products
1. Goals - to know and identify with the company, to know the company’s products, to know the customers’ and competitors’ characteristics
2. Other goals - to know how to make effective sales presentations, and to understand field procedures and responsibilities
C. Sales Rep Productivity
1. Norms for customer calls
2. Norms for prospect calls
3. Using sales time efficiently
a) Time and duty analysis/improving productivity
b) Inside sales force
(1) Due to rising cost of outside sales force
(2) Rising automation (for inside and outside sales forces)
D. Motivating Sales Representatives - the higher the salesperson’s motivation, the greater his or her effort 
1. Sales quotas
2. Supplementary motivators (meetings, contests, etc.)
E. Evaluating Sales Representatives
1. Sources of information - sales reports including activity plans and write-ups of activity reports
2. Formal evaluation - current-to-past sales comparisons, customer-satisfaction evaluation, and qualitative evaluation
3. Key indicators of sales performance
a) Average # of sales calls per rep per day
b) Average sales call time per contact
c) Average revenue per sales call
d) Average cost per sales call
e) Entertainment cost per sales call
f) Percentage of orders per hundred sales call number of new customers per period
g) Number of lost customers per period
h) Sales force cost as a percentage of sales
4. Performance may also be related internal factors (effort, ability, strategy) and external factors (task and luck)
VII. Executive Summary
II. Lectures
A. Direct and Interactive Marketing

Direct marketing methodologies have been used for decades. Initially, direct marketing methods were simple and limited in their effectiveness. They consisted of “push” strategies with a rudimentary form of a “call-to-action.” They usually consisted of single direct mail programs to current customers and prospects. Prospects were found by purchasing lists of names and addresses from firms called list brokers. The message was similar, if not the same, for every consumer. Catalogers were the primary users of direct marketing as the nature of their business, i.e., remote selling without a storefront, provided the only means of communicating and transacting with their customers. Direct mail and the telephone were the main means of communication. The catalogers, who had deeper financial and technical resources, performed some analysis on their customer information and to a certain extent created a somewhat personalized message to the customer. This was more at a sub-segment level rather than a specific individual level. For example, if they overlaid their information with purchased demographic information, they may identify which of their customers or prospects were nurses and send a uniform catalog to only these individuals. Each communication was usually a standalone communication with no or very little integration of managing multiple communications. A promotion would be mailed, responses would be tracked, no lifetime value would be calculated, and marketing models were basically a means of attempting some prediction of the promotion response.

As technology capabilities improved and became more affordable, organizations started to capture and analyze more information. This may have included information on prior promotions, economic conditions, pricing strategies, or competitive information. This information was then input to their customer response analysis to gain a better understanding of their customer behavior. Organizations started to maintain customer historical information and calculated customer lifetime value. They also started to create behavior change models in addition to their predictive behavior models.

In the mid- to late 90s technology, fueled by the Internet, smart kiosks and other technology innovations created an environment where customer information could be captured more quickly and accurately, which enhanced their behavior changing methodologies. Computer processing and storage cost reductions, increasing efficiencies in data capture, storage and retrieval complemented by marketing specific software tools and innovative advances in technologies that supported consumer interactivity enabled marketers to execute sophisticated strategies while sustaining and growing relationships with individual consumers. It is no longer an option, but instead a necessity that organizations adopt best practices in technology and interactive strategies to remain competitive.

Growing consumer social pressure related to privacy has placed new constraints on organizations. Along with an organization’s ability to capture and use vast amounts of consumer information in support of their marketing strategy comes an ethical and legal obligation. Larger organizations have the challenge of ensuring that they are in compliance with current legislation related to the use of customer information and must be prepared to handle pending legislation if enacted. Smaller organizations have the same challenges, and additionally, they do not have all of the resources to ensure their compliance. Being aware of these challenges and being able to execute a strategy to meet the challenges are two distinct things. For example, a multi-division corporation may find that the consumer has alerted one area that they no longer wish to have their information kept and used to maintain the relationship. However, another division in the same corporation may not be aware of this request and continue to operate as before. The web site www.ftc.gov is a good place to find information regarding current and pending legislation in these areas.

B. Sales Function Considerations
“The Death and Rebirth of the Salesperson”
This discussion focuses on the process of and changes in this important area of marketing. We also consider the role and value of effective sales force policy and strategy in the overall marketing process for the organization. It is useful to update the examples so that students will be able to identify readily with this concept based on their general knowledge of the companies and products involved in the lecture/discussion.
The discussion begins by considering past sales force strategy variables. This leads into a discussion of the implications for the introduction of new strategies for the future, given the substantial technological and other changes sales professionals and firms will encounter in the medium and long run environment.
Teaching Objectives
• To stimulate students to think about the critical sales force and policy issues.
• To recognize some of the directional variables in sales force policy.
Discussion 
INTRODUCTION—IS THE CUSTOMER YOUR PARTNER?
Today’s customers want solutions, and companies are remaking their sales forces to satisfy them. Nevertheless, total quality goals and sales quotas still clash. This is the primary theme related to the new enlightened sales force of the future. In the past, sales people would brag that their primary purpose in life was to push metal (IBM) or slam boxes (Xerox). Today, the sales force gauges success as much by customer satisfaction as the units sold. The former is generally a much more rigorous yardstick than the latter. As companies today are finding that if you anticipate what your customers need and then deliver it beyond their expecta¬tions, order flow takes care of itself.
As more managers awake to the challenge, old stereotypes are fading faster than Willy Loman’s smile and shoeshine. Forget the mythical lone-wolf salesman; today’s trend-setting salespeople tend to work in teams. The traditional sample case is more likely to hold spreadsheets than widgets. Today’s best salespeople see themselves as problem solvers, not vendors.  They gauge success not just by sales volume but also by customer satisfaction. They do not “sell”; they “partner” with the customer.
Companies that dismiss the new, more collaborative sales methods as a fad are likely to slip behind. Today’s de¬manding buyers are running out of pa¬tience with mere product pushers, whether at the new-car showroom, on the floor of a department store, or in the corporate conference room. They will tell you that do not want to deal with anyone selling anything unless they can tell the firm exactly how it will help their business.
 
DEVELOPING A NEW ATTITUDE IN SELLING
If ever there was a business that cried out for a new way of selling, it is that of moving cars from the show¬room floor to the driveways of Ameri¬ca. The familiar but widely despised old approach is known among automotive his¬torians as the Hull-Dobbs method, named after Memphis dealers Horace Hull and James Dobbs, who reputedly created it following World War II. In the old Hull-Dobbs drill, customers exist to be manipulated, first by the salesman, who negotiates the ostensibly final price, then by the sales manager and finance manager, who each in succession try to bump you to a higher price.
Car buyers are fed up. A recent survey by J.D. Power & Associates found that only 35 percent felt well treated by their dealers, down from 40 percent a decade ago.  In 1983, 26 percent of buyers rated the integrity of their dealers excellent or very good; by 2001, that figure had dropped to under 20 percent. “People feel beaten up by the process,” says the owner of 13 import and domestic franchises in the suburbs of Washington, D.C. “You think you got a good deal until you walk out the door. The salesmen are inside doing high fives, and the customer is lying out on the street.”
This is where Saturn came into the car game a few years back and presented its original, no-argument, guaranteed lowest price sticker system. The price you pay for a Saturn is the one on the sticker (between $9,995 and $18,675, de¬pending on model and features). However, that is only part of the package. Buy a Saturn and you buy the company’s commitment to your satisfaction. Their contact with and to the customer may appear corny, but consistently  Saturn has scored  high in the J.D. Power customer satisfaction study, just behind or above Lexus and Infiniti, vehicles that  cost up to five times as much. Maybe it is corny, but it works. The philosophy of “new economy” car dealers, following the Saturn model, is to exceed customer expectations.
Saturn reformed their sales methods to exploit an obvious market opportunity; the same is true for the reformed IBM sales force, which is only half the size it was in 1990. Those who survived are part of a new operation that is a cross between a con¬sulting business and a conventional sales operation. Big Blue now encourages buyers to shop for salesmen before they shop for products.
Consultants obviously need a more so¬phisticated set of skills than metal pushers, and in their new role, as purveyors of solu¬tions rather than products, IBM’s sales teams do not always recommend Big Blue’s merchandise. About a third of the equip¬ment IBM installs are made by DEC and oth-er competitors.
One aspect of managing a sales team has not changed much: How you motivate flesh-and-blood salespeople. It remains the same idiosyncratic bleed of financial incentive, inspiration, and cajolery.  As the sales pros will say: “There is nothing magical about sales. You want to be truthful and present a credible story so people will want to do business with you now and in the future. To sell effectively, you need to present the facts, list your supporting arguments, and learn all the nonverbal cues your customer gives while you’re making your presentation.”
With one element of sales motivation, how they pay their salespeople, many companies believe they can improve on tra¬dition. IBM, for example, is following a growing trend to base compensation partly on customer satisfaction. For some of the new wave salespeople, 45 percent of the variable com¬ponent of a paycheck depends on how customers rate the salesperson.  In addition, usually this depends on how well the salesperson has done in helping the customer meet their business objectives. Result:  the salesperson can make a lot more or a lot less.
WE’RE ALL SALESPEOPLE—OFFICIALLY OR UNOFFICIALLY
What does it take to be a truly outstanding salesperson? As is always the case, there are no simple answers. Moreover, achieving excellence in one type of sales endeavor, say selling personal insurance undoubtedly requires somewhat different aptitudes and skills than achieving excellence when selling sophisticated information systems to corporate buyers.
High-performing salespeople generally differ from other salespeople in terms of some general attitudes they have about the job and the man¬ner in which they conduct their business. High-performing salespeople:
• Represent the interests of their companies and their clients simultaneously to achieve two-way advocacy.
• Exemplify professionalism in the way they perform the sales job.
• Are committed to selling and the sales process because they believe the sales process is in the customer’s best interest.
• Actively plan and develop strategies that will lead to programs benefiting the customer.

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