Page 144 - DMGT205_SALES_MANAGEMENT

Sales Management

Notes managed the sales force until it grew to a size of three men, at which time he secured the
services of Hiren Shah as sales manager.
Before Shah's arrival, and for several years thereafter, Pandey told the salesmen expressly
the names of firms he wanted them to call on. The founder was actually interested in the
reputation of his young company. His concern for reputation included product
characteristics as promised, delivery on time (critical to customers for these goods), and
ethical, highly reserved business conduct by the salesmen. However, this concern for
reputation was not restricted to these factors. Pandey also wanted to have, as his customers,
those who employed the finest reputations. For example, he told his salesmen never to
solicit the orders of a small firm then known by the name of Rohan and Lovely, for he
considered the owners to be social climbers without proper backgrounds. In addition, he
did not like an advertisement of theirs he once saw in a weekly business newspaper. He
also instructed his salesmen not to call on Kapoor Glow Ltd because it had been turned
down for a loan at the bank that Pandey used. This was despite the fact that Kapoor Glow
Ltd found credit at another bank.

Not all the instructions were negative however. Pandey had the sales men, all of whom
were engineers, visit Camden Mills, Stone & Kruger, and South Indian Metals time after
time even though all three were committed to other sellers and other product designs. He
wanted ABC Company to be a name that such firms knew and respected. He also cultivated
several large national companies such as Combustion Engineering, Indian Machine and
Foundry, Westinghouse and Melpar.
After Pandey's death, Shah continued these policies for the better part of a year. At that
point Jevan Vats, the new president hired from outside, had a long talk with the sales
manager and explained that he thought some changes were desirable. The firm should try
to maximise sales and abandon all the "notions and pretentions', as he termed them. The
salesmen should be put on a combination of salary plus commission. The two other
executives in the company, the finance man and the production man, spoke up with a
thorough endorsement of such changes. The existing policy was straight salary.

With some misgivings, Shah devised a new compensation structure for his four salesmen.
Under this plan he estimated that a salesman would earn about 80 per cent of his
compensation through salary and about 20 per cent through commission. The plan was
announced on August 1 and the men were told it would go into effect in thirty days. Sales
in August slumped about 17 per cent from the same month one year earlier and 14 per cent
from the same month two years earlier.

Exhibit 1

Product September July ( ) September ( ) September
( ) last year two years before ( )
Dryers 2,10,000 3,45,000 3,50,000 3,22,000
Sprayers 77,000 75,000 80,000 78,000
Planers 41,000 43,000 40,000 39,000
Power saws 32,000 30,000 30,000 31,000
Drills 42,000 41,000 40,000 39,000
Sanders 95,000 73,000 72,000 70,000
Metal buffers 75,000 49,000 50,000 48,000

Contd...

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