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Economics and finance concepts for sales

In this article we will look at some key concepts in finance and economics that all sales people need to understand

Wants versus Needs

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People at all times need and want goods and services. In order to get this they have to buy it. Which by definition means that somebody has to sell it to them. Therefore, there will always be a need for sales people as long as people want goods and services.

Let’s look at how we can categorise what people want and need.

Human Beings have three basic needs – food, clothing and shelter. If you really think about it we don’t need anything more than that.

However, beyond these needs we may have an infinite amount of “wants”.

For example, we have many companies and organizations selling food and clothing. A person may buy basic food items such as bread and milk but a person will also have wants such as chocolates, soft drinks and so forth. A person may buy basic clothing to clothe himself. But his wants will motivate him to buy designer clothing. And if you think about it, designer clothing is not just about the “need” for clothing oneself. It is more about how you want people to perceive you e.g. you want to look good, want to have a higher status and so on.

Lets take another good – property sold by real estate agents.

A person may buy or rent a simple house or flat but his wants motivate him to buy a luxury house to live in. Here the luxury home is not just about having shelter but is about fulfilling deeper emotional needs e.g. the need for status in society. A smart real estate agent will understand this.

From the above we can deduce that needs are limited whereas wants are truly unlimited.

This concept of needs and wants goes to the beginning of time.

Why we need to do market research

In order to understand what the market wants and what sales potential there is, a businesses should do market research for the given area or country. Today millions of dollars are spent in developing a product – be it for the mass market or the luxury market.

A salesperson needs to understand these basic concepts. He also needs to understand the needs and wants of a particular group of people that he is selling to. What people want changes all the time and a good salesperson will adapt to a customer’s requirements.

It is imperative that a salesperson has good product knowledge of what he is selling.

Different goods and services are sold differently. How we sell daily consumables like groceries, cosmetics, washing powder and other supermarket lines is very different from selling motor cars.

And even all motor cars are not sold the same way. For example there are vehicles which are manufactured for the mass market and there are vehicles manufactured for the luxury market. In order to target a specific group of people, a survey has to be done. Is the area you targeting consisting primarily of young people (for example, from the ages of twenty years old to thirty years old)? This will give you an indication of what their tastes are like. Also, what are the average incomes which will tell you about affordability.

Today technology is a major industry. Think about computer hardware, computer software, computer tablets, cell phones. Technology is constantly changing because manufacturers of technology are in a never-ending competition for share of the global market. As this happens sales people need to constantly update their knowledge of new products.

There are products well established in the market. One reason is that these products may be very long in the market e.g. over 100 years old. A good product will win the trust of customers – especially over time. Once the trust of a customer is achieved the customer will repeatedly buy the product over his life which makes the customer very valuable.

Sales are also generated by word of mouth i.e. the good experience of one person is generally passed on to another customer. To have a sustainable business, there has to be repeated sales.

Why we need to understand financial concepts

A salesman must also understand the bigger picture of a business. For any business to survive, it must sell its products and services at a profit. This profit is usually called the gross profit. Very often, salespeople are paid commissions on the gross profit number. From the gross profit all operating expenses are deducted to get to the net profit or loss.

This net profit or loss is referred to as the “bottom line”. If the business makes a net profit it becomes a feasible business to operate and it will be easy for it to continue to exist. But if the business makes net losses on a continual basis it will get to a point where it may not be feasible to operate.

However, it should be quite clear now that a business cannot have a “bottom line” i.e. without selling first. Sales, by the way, is often referred to as the “top line”.

From this we can see how important the sales function is to any business.

You can learn some basic concepts by searching on the internet. For example here is a wikipedia article on Profit Margins

https://en.wikipedia.org/wiki/Profit_margin

However,to really improve your financial knowledge to the level it should be its a good idea to attend a training course such as a Finance for Non-Financial Managers Course.

You can learn more on the following page:
https://financefornonfinancemanagers.wordpress.com/

How to achieve your sales targets

When making your first appearance to a customer you have to make a positive appearance.

It is the first appearance that lasts.

Questions you should ask yourself are: How is my dressing? How do I carry myself?

Walk upright but relaxed. Communication is crucial. This includes verbal communication as well as other forms of communication such as email, sms and phone calls.
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A salesman may know his product but if he communicates badly he would come across as someone who is doubtful. A customer will not be sold by that person. Remember we are in a very competitive world. There are many other salesmen selling the same products and services.

You have do to something extra and different from the “run of the mill” salesman. A customer buys goods or services because it will help his business improve his bottom line. The easier he can do this the more he will buy from the source that helps him do this.

A salesperson should be diplomatically persuasive and try to convince a customer how the product or service you are selling will help his business.Also customers are not on the same level. For example
a $10,000 a month customer is not the same as a $100,000 a month customer. Remember the bigger the sale, the higher the risk.

One must also be aware of a customer’s credit worthiness. Some customers credit worthiness is so bad, that they will buy from the first salesman. There are companies who do a credit check on companies. A salesman must always check that a customer’s credit has been approved. Sales made to customers should be within the approved credit limits.

In life we are often confronted with making decisions. If we decide correctly this will have a positive impact in our lives and of those around us. If we make the wrong decisions it can impact our lives negatively.In order to make decisions as close as possible to be correct, we need to to do what we call a CAF.

CAF stands for Consider All Factors. Take a piece of paper and jot down the pros and cons of a particular situation. It is good to discuss with close family members and friends for adding more pros and cons to a decision. It also depends how important a decision is. There are many decisions we make on a daily basis without thinking about it. For example; what breakfast cereal should I buy? The reason I mention the CAF exercise is that when dealing with customers, you would have to make decisions. A customer may be a big buyer, but he tends to always pay late.Do you lose the customer or continue doing business with him.

One must always understand the culture of the company one works for. There are companies whose products are very common and due to fierce competition they tend to give customers much longer payment terms than the norm. Effectively they are selling credit (like a credit card company).

All these factors must be considered by a salesman in order for him to achieve his sales targets.
Remember sales is not an eight to five job(i.e office hours). A salesman should set himself up on call twenty fours a day, 365 days a year.

I knew of a salesman who normal working day was sixteen hours a day. He was driven. The results spoke for itself. Working hard is probably more important than working smart. That is why earlier we mentioned time, presentation and other relevant sales principles when dealing with customers.

How to build closer customer relationships

On a daily basis an effective sales person will list the customers he needs to see or contact for that day. This should happen every morning before he starts his call on customers. He should also note any grievances the customer have and have honest solutions to the customers problems. It will also make good sense to contact the customer either by cell phone, email or SMS to remind him that you will be seeing him that day. This serves as a reminder to the customer and will put you in good standing, which will enhance your relationship with the customer. building-relationships

As human-beings we all have our likes and dislikes. As you deal with your customer learn his likes and dislikes. Learn the times that he is willing to see a salesman. Some customers prefer to see a salesman
before office hours whilst others like to see a salesman after office hours. By doing this one can get the undivided attention of the customer. This again, builds up a relationship with the customer.

Remember it is of the utmost importance to keep your appointment with the customer. Time is of the essence. If you pitch up late, it reflects arrogance on your part and that you are not serious about your job. This can damage relationships. Spend quality time with customer. Get as much in, in the least possible time. You also have to gauge if the customer wants a social chat or wants to keep things strictly to business. You have to go with the flow. There are many executives who like unwinding at work by having a chat that is not work related. Many customers buy from a salesperson simply because they like the person. This is also one of the factors a customer looks at, before he buys.

Learn what the customer’s hobbies are. Maybe he loves chatting about golf or maybe he loves sport cars. If you do not have knowledge on the subject it may be a good idea to sharpen your skills. Also be a good listener. People hate it when you cut in while they talking. By inculcating these habits, you will built a long and sustainable relationship with the customer.

Always be honest and truthful to the customer.Once trust is lost, it is very hard to regain it. Deliver on your promise.

Learn to smile. A customer does not like seeing someone who looks like he has the world’s problems on his shoulders. Be friendly and pleasant. If the customer has problems, give him a good hearing. It shows that you care. There are customers who find it very difficult to pay thirty days from statement date. See if you can negotiate with the accounts manager in your company for a longer term. If you can accommodate him you are sure to win him over. In this tough economy many customers find difficult to pay on time.

As a salesman, be service oriented. By this I mean, it is not enough just to take an order. Do follow-ups until the goods or services are delivered. There are cases where an excellent salesman brings in the orders only for the in-house staff to mess things up. This is a sure way to lose a customer and cause all the sales effort to be in vain. Be an A to Z salesman.

Remember the important dates of your customer such as birthdays. It is good to give him a present and show him that he or his family are important to you.

If you have the discipline and inculcate these habits your sales will grow from strength.

A great resource to learn more can be found at:
http://www.marketingprofs.com/articles/2013/11420/five-tips-for-creating-relationships-that-drive-sales