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Monash University Summer Semester 2014

MKF5391 Sales Management

Developing Sales Training Program

25370197 Hongsheng Zhang


Monash University Summer Semester 2014


Table of Contents

1.0 Intruduction ..................................................................................................

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2.0 Benefit and drawback of sales training ........................................................

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3.0 Process to develop a sales training program 3.1 Training assessment .............................................................................

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3.2 Program design ....................................................................................

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3.3 Reinforcement .....................................................................................

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3.4 Evaluation ...........................................................................................

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4.0 The future of sales training program ............................................................

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5.0 Recommendation .........................................................................................

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6.0 Reference .....................................................................................................

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Executive Summary The purpose of this report is to establish an effective way to construct a sales training program. Conduct a sales training can benefit both salesperson and the organization. For salesperson, training can enrich present jobs, higher satisfaction, engage more involvement, commitment, and increase performance. For the organization, sales training can increase employee loyalty and productivity. But sales training have also drawbacks. It might hurt morale, if the career progress is not promoted as expected. Moreover, without proper methods and tools, training can be ineffective. There is four phase to conduct a sales training program, 1. Training assessment. 2. Program design. 3. Reinforcement. 4. Evaluation. Each of the phases is dividing into more detail steps to provide guidance to construct sales training program. A effective program required a fully understanding of the company/salesperson’s need, a clear objective, and coverage of sales and non-sales person. Also, content and methods is very important for a successful training program. Contain information about sales and other company function can better help sales people providing solution to the customer. Using more interactive methods can significantly increase the effectiveness of the training. With proper reinforcement, the influence of the sales training can last longer and be more effective. Finally, to evaluate the result of sales training can help to improve future program and help company to save money and resource. Furthermore, the future of the sales training will be evolving as the world is changing. Sales training will included more knowledge about customer management and other business function. Also sales training will be more about the future company strategy than to understand the present policy and regulations. beside the content, the methods of sales training will be evolving as well, more technology will be include in the sales training to make the program more effective.


1.0 Introduction Sales training is a crucial link in the business to ensure the sales force is up-to-date to generate revenue. However, Australia businesses are usually failed to take sales training seriously. “It has taken over 100 years for sales and selling to make it on the Australian tertiary curriculum.” (Barrett, 2012) The lack of sales training is the reason to result the dissatisfaction of sales force’s performance in Australia business, according to Australian Institute of Management (AIM) survey in 2013. (Redrup, 2013) The sales training enriched the salesperson’s career, and prepares the sales force for future development. Therefore, to construct an effective sales training program will have significant influence on business revenue. As such, several studies have been conduct regarding to sales training. The purpose of this report is to establish a basic framework for constructing sales training program and also foresee the influence of the future trend of sales training via discuss and compare different academic literature and industry insights.

2.0 Benefit and drawback of sales training Sales training can benefit not only the sales people and also the business in many ways. As for sales people, a proper sales training can enrich the present jobs, higher the job satisfaction, engage more involvement, commitment and increase job performance. With all the necessary training the confidence level will be elevated, which can help salespeople deal with job conflict. (Ingram, Laforge, Avila, Schwepker, & Williams, 2009) Beside that, through the training salespeople would have a clear view of their career progress, which can motivate harder work to achieve their career goal. (Spiro, Stanton, & Rich, 2003) Sales training program is also a great chance for networking, by meeting more peer salesman which can help getting more information of the trend and news in the industry. From business perspective, sales training can make employee more loyal and productive, and also increase the retention rate of key person in the business. (Jackson, Hollmann, & Gallan, 2006) It developed a channel for management to communicate with sales force. By go through the training, the sales person will increase their understanding of the product and the organization, it could result a reduction of management support, since they can manage their activity on their own. (Jobber & Lancaster, 2009) Moreover, training in “self-management and journey planning should reduce company expanse, have higher skills salesperson mean fewer call backs to close the sale. And better use of technology should also reduce cost (e.g. using email rather than site visit where appropriate).” (Jobber & Lancaster, 2009)

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With all the benefit, sales training can along with drawback as well. When training is completed, salesperson will raised their expectation in their career progress, without been promoted as expected, morale may suffer, and reduce the enthusiasm for their current jobs. (Jackson et al., 2006) Also, sales training will cost extra administration burden for the company, all the training room, tutor, time and many of the resources will be invested into training program and cost extra administration expanse. Moreover, after spending tones of the company resource, training can be ineffective, “fifty percent of the US firms responding to a Sales & Marketing Management Survey reports that their training programs had little or no impact on sale.” (Stanton, Buskirk, Spiro, Balderstone, & Power, 1999) However in general, the benefit of sales training is greater than its drawback, with appropriate methods and control, company can effectively reduce the impact which the drawbacks bring to the training program.

3.0 Process to develop a sales training program Many of the academic literature has suggested several training process, such as Ingram et al (2009), Stanton et al (1999) and Honeycutt et al(2003), but basically it all similar to Spiro’s (2003) four phases process. Spiro indicates that to conduct a sales training program needs to follow: 1. Training assessment. 2. Program design. 3. Reinforcement. 4. Evaluation. And each one of the phase can be expanded for more detail steps to develop a more desire training program (see Figure 3-1).

3.1 Training assessment Training assessment is the first phase to initiate a training program. Basically in this phase, company needs to determine three factors which are 1. Training need assessment, 2. Training objective and 3. Training objects. Training need assessment is “to compare the specific performance-related skills, attitudes, perception, and behaviour required for salesforce success with the state of readiness of the salesforce.” (Ingram et al., 2009) The assessment can be performed in two ways, self-assessment and organizational assessment. (Jackson et al., 2006) Self-assessment can be done through workbooks or workshops, skills assessment exercise, completing interest inventories or clarifying salespeople’s values. (Haskell, 1993) The organizational assessment can include assessment centre, psychological testing, performance appraisal and succession planning. (Jackson et al., 2006) Through the assessment company and salesperson will find out the weakness that needs to overcome and prepare for the further process.

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Establish program objective

Identify who should be trained Training assessment Identify training needs and specific goals

How much training is needed?

Who should do the training?

When should the training take place?

Program design

Where should training be done?

Content of training

Teaching methods using in training

Determine how training will be reinforced

Reinforcement

What outcomes will be evaluated? Evaluation What measures will be used?

Figure 3-1 Phases of developing and conducting sales force training (Spiro et al., 2003)

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Training objective is the goal of the training program. The objective should be SMART (specific, measurable, attainable, relevant, and timely), and considering both company and salesperson’s interest. By setting an objective, “it force the sales manager to define the reasonable expectation of sales training rather than to view training as a quick-fix panacea for all the problems faced by the sales force.” (Ingram et al., 2009) Stanton et al (1999) was suggested six most common objectives for sales training (see Figure 3-2). In general situation, one or multiple objectives may be interrelated and included in one single training program.

Sales training program objective 1. Increased sales productivity. 2. Lower turnover. 3. Higher morale. 4. Improved communication. 5. Improved customer relations. 6. Improved self-management.

Figure 3-2 Sales training program objective (Spiro et al., 2003)

The new hired salesperson obviously needs some training, but usually there are some people in the existing salesforce who are struggling to achieve their goal which needs extra training as well. Also the company is continuously changing as the world is evolving. New product and technology is introducing to the market, skilled sales person will benefit from training to acquiring new knowledge. Furthermore, not only the salesforce required sales training, some of the non-sales employees need some sales training too. “Those non-sales staffs who deal with clients on a regular basis should also be trained on how to effectively communicate the company’s promise of value.” “They can influence a prospective client as much and sometime even more than a salesperson can,” (Reyes, 2013) But Spiro et al (2003) research indicates “a company will achieve its best investment return when it gives priority to training the middle 60% of its salesforce.” The selection of training object is based on many factors, the objective of the training, the investment return, and the current job description.

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3.2 Program design The second phase of the process is training program design, based on specific objective and training object, this phase will determine the content and the methods for the training. Jobber et al (2009) suggest “A training program will attempt to cover a combination of knowledge and skill development“. More specifically, training program “content revolves around four topical areas: product knowledge, market knowledge, company information, and sales techniques.” (Honeycutt, Ford, & Simintiras, 2003) A thorough understanding of the product can help salespeople proving a better offer to the customer. The market knowledge includes the understanding of the market trend, and the competitor and their product. Company information is covered the company objective, policy, career process, and the structure of the whole organization. The last topic is sales technique. It is about selling procedure, use of technology, conflict handling, presentation skill, and relationship management. One or more topics can be include in same training program depends on the objective of this specific training is for. Participative training methods and non-participative training methods are two of the approach for sales training. “Participative training methods involved role play, case methods, computer game, and on job training. Non-participative training methods include lecture, video, and guess speaker.” (Honeycutt et al., 2003) Gordon et al (2012) reports that training methods need to be highly interactive and participative to be more effective. An early study from Shepherd and Ridnour (1995) founds that role play is the most used and effective training methods. Participative methods “allow for customized simulations and immediate feedback, resulting in specific skill building and rich discussion.” (Gordon, Shepherd, Ridnour, & Weilbaker, 2012) Besides of above mentioned methods, sales training can also classified as group training and individual training. Every salesperson has their own understanding and experience in the field. Training program should tailor the specific methodology to approach salesperson’s individual need and achieve company’s training objectives. (Griffin, 2003) Group training have its cost advantage, and massive communication, but follow by the individual mentoring/coaching approach will further develop salesperson’s skill and fulfil the weakness in detail.

3.3 Reinforcement Sales training is not working if it is only an even but a process to changing behaviour. (Huisken, 2008) A one off sales training is not enough to have impact to person’s behaviour. The majority of the sales training programs are not offering a follow up plan. (Reyes, 2013) A learning curve (see figure 3-3) indicates without proper post training behaviour, the

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knowledge acquired through previous training will be totally wasted after 14 month. (Schultz, 2013) Xerox Corporation has found that their sales trainee have an 87 percent loss of skills in 30 days after the initial instruction. (Spiro et al., 2003) the common methods to reinforce the prior sales training program can be easy, all of the training methods was mention before can be used again as reinforcement. But the most frequently used method is for the sales manager or senior sales person served as coach/mentor reinforce the training efforts during the actual work. (Spiro et al., 2003) Refreshing class is another common way to reinforce sales training efforts. A short refreshment session can internalized the knowledge and make the training investment have more ROI. Refreshment class can be delivered via varies form, for example, short video clip, online seminar, email newsletter and et al. All learning is an ongoing process, without reinforcement, all the knowledge learned from training program will fade. “Only through repetition and practice will salesperson internalize the training and put it to use consistently�. (Schultz, 2013)

During Training Event

After Training Event

100% 90% 80% 70%

Program: - Engaging - On target - Well delivered

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60% 50% 40% 30%

Motivation enhancement Concept reinforcement Complementary learning Action reminders Practice Feedback Expectation reinforcement/ informal accountability

20% 10% 0% 2

4

6

8

10

MONTHS

Figure 3-3 Effects of reinforcement after training events (Schultz, 2013)

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3.4 Evaluation The final phase to develop a sales training program is training evaluation. It is a necessary step for company executives to “determine the value of the training and to improve the design of future program. “(Spiro et al., 2003) But up to 30 percent of the companies do not have formal or systematic training evaluation. (Scovel, 1990) Attia et al (2002) report that “conducting sales training evaluation necessitate additional time, money and efforts that many of the company are unwilling or unable to spend”. Other than that, Attia’s article is also listed four major difficulty encountered in evaluating sales program. 1. Managerial perceptions 2. Evaluation restriction 3. Methodological shortcoming 4. Little of empirical evidence First difficulty is managerial perceptions. The company executives are having anxieties about the performance appraisal, bad evaluation result will giving them a hard time to explain to the upper management. And also managers “share a general belief that all training is good, some training is better than no training.” (Attia, Honeycutt, & Attia, 2002) The second difficulty is evaluation restrictions. About 38 percent of sales manager reports that “various restrictions work against efforts to evaluate”, time and money are been claimed as the most common impediments. (Honeycutt & Stevenson, 1989) the third difficulty is methodological shortcomings. “Methodological problem revolve around sampling, data collection, and perceptual areas that are both complex and difficult to correct once the training program has been designed and/or the data have been collect.” (Attia et al., 2002) The final difficulty in the report is little empirical evidence. It means there are only a little numbers of articles which demonstrate and detailed how to empirically conduct sales training program evaluation. (Attia et al., 2002) The lack of academic guidance is causing the shots of sales training evaluation. In the 1950s sales management and sales trainers realized the significance of the training evaluation. (Attia & Honeycutt, 2012) Then Kirkpatrick proposed a model that is been most widely used in today’s sales training program. (Honeycutt et al., 2003) The model includes four training evaluation levels: 1. Reaction 2. Learning 3. Behaviour 4. Results These four levels of evaluation progress are in order from the lease to the most complex to accomplish. (Honeycutt & Stevenson, 1989) The first level “’reactions’ are measures of how the sales trainees feel about various aspect of a sales training course.” (Jobber & Lancaster, 2009) Learning is conduct a “before” and “after” training test, to examine the quantity and quality of knowledge that acquired by trainees. (Stanton et al., 1999) The third level behaviour means behaviour changing evaluation. It measures “the extent to which salespeople modify their job-related behaviour due to sales training”. (Jobber & Lancaster, 2009) The final level is result, which can also refers to “utilizing objective measures – such as sales revenue, profits, number of new customers, and travel expanses – to assess the success of the training program.” (Honeycutt & Stevenson, 1989) MKF5391 Sales Management / 25370197 Hongsheng Zhang

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Although the Kirkpatrick method is been adapt in industry but there is still argument in the academic to question its effectiveness and applicableness. Attia and Honeycutt (2012) argue the reaction level can be influenced by instructor personality or skewed by learning environment. Also the knowledge which evaluated on the second level might unable or unwilling to be used in trainee’s jobs. Likewise, level three and level four evaluations is too time consuming and complicate for behaviour change to be evaluate. A report by Tyler (Tyler, 2002) indicated 78 percent of the companies assess sales training at reaction level, it down to 32 percent when it goes to learning. Only 9 percent of companies evaluate up to behaviour level and 7 percent in result level. The report shows the industry is only invest in first two level of evaluation which been proofed might have little to non-credibility to actually evaluate the effectiveness of the training program. With the company invest in last two level of the evaluation, it might be too expansive and not economically worth.

4.0 The future of sales training program The world and the market is changing rapidly, the sales trend is evolving as quick as the market, therefore the sales training need to catch with the era of the future in order to lead the company along with the age. Storbacka et al (2009) reports three continuums change in the sales world. Firstly, Sales is “from an independent function to a pivotal part of a long term process of customer management.” (Storbacka, Ryals, Davies, & Nenonen, 2009) What this is going to affect sales training is, the customer management and relationship management is going to have more standing in the program than the selling technique. The second change from the report states that, sales as an “isolated department with little cross-functional influence to evolve to an integrated sales department with links to other activities such as finance, marketing and operation”.(Storbacka et al., 2009) The sales training is not going to be only sales training any more, it will integrate more knowledge from other company department to make sales to be part of the overall company operation. The third change is identified that sales will “from operationally focused to a solution selling, strategically–focused part of business strategy“. This will lead sales training to include more future company strategy rather than only present policy and regulation. Besides changing in content to cater to the future trend, the training methods will be evolving with the technology’s improvement. The internet and smartphone will have a huge place in the sales training with its low expanse, interactive, and convenient advantage.

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5.0 Recommendation Sales training program is a process to changing people’s behaviour, with proper tools and evaluation, such activity can significantly influence the company revenue. However it is difficult to develop an effective and sustainable training program, to reach the goal, the following action is recommended for management to adapt. (1) Sales training can have benefit and drawbacks; with proper tool the drawbacks can be reduced. Considering the drawbacks in the early stage of the process can significantly reduce the effect. (2) Training need assessment is to find out the weakness of salesperson itself and the weakness of the organization. Multiple needs can be fulfilled in a single program with careful planning. (3) The training objective need to follow one or more of the salesperson and/or company needs, and review it often along the process. (4) Sales training is usually focus on sales people but with the integration of different company functions, some of the non-sales people is needs for some sales training. (5) Normally the sales training is contain product knowledge, market knowledge, company information, and sales techniques, company might need to considering adding company strategy, customer management, and knowledge from other department (such as marketing, finance, logistic et al.) (6) Methods of sales training can be more interactive and adopting more technology. Also it needs to be more personalized, using coaching/mentoring other than group training. (7) Training needs to reinforce every once or while to maximize its effect to changing behaviour. (8) Evaluation tool is subject to the training objective; with proper evaluation the program will be more effective and helpful. .

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6.0 Reference Attia, A.M, Honeycutt, E.D, & Attia, M.M. (2002). The Difficulties of Evaluating Sales Training Industrial Marketing Management 31(3), p.253-259. Attia, A.M, & Honeycutt, E.D. Jr. (2012). Measuring Sales Training Effectiveness at the Bahviour and Results Levels Using Self- and Supervisor Evaluation. . Marketing Intelligence & Planning, 30(3), p.324-338. Barrett, S. (2012, 20/08/2012). Why Sales Doesn't Have Its Rightful Place at the Boardroom Table? Retrieved 10/01, 2014, from http://www.smartcompany.com.au/marketing/sales/27444-whysales-doesn-t-have-its-rightful-place-at-the-boardroom-table.html

Gordon, G.L, Shepherd, C.D, Ridnour, R.E, & Weilbaker, D.C. (2012). The Training of Sales Managers: Current Practices. Journal of Business & Industrial Marketing, 27(8), p.659-672. Griffin, N.S. (2003). Personalize Your Management Development. Harvard Business Review. Mar2003, 81(3), p.113-119. Haskell, J.R. (1993). Getting Employees to Take Charge of Their Careers. Training & Development Feb93, 47(2), p.51-54. Honeycutt, E.D, Ford, J.B, & Simintiras, A.C. (2003). Sales Management: A Global Perspective. London: Routledge Taylor & Francis Group. Honeycutt, E.D, & Stevenson, T.H. (1989). Evaluating Sales Training Programs. Industrial Marketing Management. Aug89, 18(3), p.215-222. Huisken, B. (2008). Sales Training Does Not Work! JCK Aug2008, 179(8), 51. Ingram, T.N., Laforge, R.W., Avila, R.A., Schwepker, C.H.Jr, & Williams, M.R. (2009). Sales Management Analysis and Decision Making. New York: M.E. Sharpe Inc. Jackson, D.W.Jr., Hollmann, T, & Gallan, A.S. (2006). Examining Career Development Programs for the Sales Force. Journal of Business & Industrial Marketing, 21(5), p291-299. Jobber, D, & Lancaster, G. (2009). Selling and Sales Management (8th ed.). Harlow: Pearson Education Limited. Redrup, Y. (2013, 29/11/2013). Sales Performance in Australian Businesses Rated Very Poor to Average, AIM Survey Finds. Retrieved 10/01, 2014, from http://www.smartcompany.com.au/marketing/sales/34763-salesperformance-in-australian-businesses-rated-very-poor-to-average-aim-survey-finds.html

Reyes, R. (2013). Why Traditional Sales Training Doesn't Work. MultiLingual Dec2013, 24(8), p.39-41. Schultz, M. (2013). Keys for Sales Training with Maximum Impact. T+D, 67(3), p.52-57. Scovel, K. (1990). What's Topping the Charts in Management Training? Human Resource 10


Spiro, R.L., Stanton, W.J., & Rich, G.A. (2003). Management of Sales Force (7th ed.). New York: McGraw-Hill Higher Education. Stanton, W, Buskirk, R, Spiro, R, Balderstone, R, & Power, M. (1999). Management of a Sales Force. Sydney: McGraw-Hill Book Company Australia Pty Limited. Storbacka, K, Ryals, L, Davies, I.A, & Nenonen, S. (2009). The Changing Role of Sales: Viewing Sales as a Strategic, Cross-functional Process. European Journal of Marketing, 43(7/8), p.890-906. Tyler, K. (2002). Evaluating Evaluations: Asking the Right Questions is Only the First Step in Creating a Good Training Evaluation. HR Magazine, 47(6), p.85-89.

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