Grady Dethridge, assistant sales manager of inside sales personnel, of P.F.V., Inc., was concerned with the effectiveness of his staff sales meetings in motivating the internal sales force. He had just returned from a half day conference on Personal Communication Within the Sales Organization put on by the Atlanta Chapter of Sales/Marketing Executives International. An important focus of the meeting was the use of sales meetings and one- on-one interviews to motivate sales personnel. As a result, Dethridge proposed a change in format for his sales meetings to his boss, Ralph Turner, the sales manager.
P.F.V. was incorporated in Atlanta fifteen years ago as a plumbing supplies distributor specializing in pipes, valves, and fittings. The company had gradually expanded its operations to twelve southeastern states with sales offices in Atlanta, Georgia; Chattanooga, Tennessee; Charleston, South Carolina; and Greensboro, North Carolina. Warehouse facilities were maintained in Atlanta and Greensboro. Annual sales revenue had reached $160 million. P.F.V.’s success was attributed to the company’s ability to hire and retain an experienced, knowledgeable and loyal core of sales and purchasing personnel. The “family” environment that P.F.V. management had worked so hard to develop was threatened recently by a serious internal conflict between one of the company’s top salespersons and the Greensboro office manager with whom the salespeople worked very closely.
Plumbing supply distributors provided construction contractors and supply houses with a broad inventory of plumbing supplies. These customers typically could not afford to keep on hand the myriad types and sizes of plumbing products required. So distributors, in effect, were inventory risk takers. Because the distributor’s investment was high, careful attention to the margin between the purchase and sale price for each item was crucial.
P.F.V. had numerous competitors in its trading area. To maintain an adequate return on investment, P.F.V. specialized in pipes, valves, and fittings. This allowed the company to stock a particularly deep inventory in these items. This made rapid delivery possible and enabled P.F.V. to charge slightly higher prices than if the company offered a full line.
With the necessity of maintaining strict control over the purchase schedules and selling prices, the organizational structure and training program was geared to facilitate communications among P.F.V. employees. When a sales trainee was hired, he or she spent one or two years working in the warehouse to acquire a comprehensive knowledge of the product line.
The salesperson then spent six to eight months working for the office manager at the billing desk to learn the procedure for price quotations. The office manager was responsible for monitoring inventory levels, interacting with manufacturers’ representatives to purchase inventory at the best possible prices, and setting minimum selling prices for P.F.V. salespeople.
The trainee then spent two to five years as an inside salesperson. The inside salesperson handled house accounts and repeat purchases from established accounts, and expedited orders written by outside sales personnel. Each inside salesperson handled the accounts of one or two outside sales personnel so that good communications between the inside and outside sales personnel and the customer were maintained. Inside sales personnel were paid straight salaries.
After gaining inside experience, the salesperson was eligible to become an outside salesperson. On the firm’s organizational chart, outside salespersons were considered as equals to the inside sales manager. They traveled a specific geographical territory, calling regularly on existing accounts with supply houses and contractors, as well as seeking new accounts. Because plumbing products were high-priced items, customers looked to the P.F.V. salespeople for advice on what and how much to buy. Considerable product knowledge was needed, because the salesperson frequently was asked to quote on items needed in huge construction projects. Outside sales personnel were paid a 10 percent commission and were responsible for setting product prices, subject to minimums determined by the office manager.
The “family” environment at P.F.V. was enhanced by regular formal and informal meetings. Twice monthly, manufacturers’ representatives sponsored seminars to disseminate product information. The inside salespeople met each week to discuss products and operations with the inside sales manager and the office manager. Outside salespeople met monthly for the same purpose. Each outside salesperson met with his or her inside “partner” regularly to discuss their accounts.
The focus of the regularly scheduled meetings of both the inside and outside sales personnel was almost exclusively product training. Grady Dethridge, assistant sales manager of inside sales personnel, proposed to Ralph Turner that 25 to 50 percent of the time in each meeting be devoted to activities designed to motivate the sales force to greater and more effective effort. Motivation-increasing activities might include demonstration sales, description of “success stories,” review of selling techniques, and information on comparative performance. Turner’s response was that no time could be spared from product training—the line was large and complex and the P.F.V. sales force had established a reputation in the market for its knowledge of the product line and how it could best serve customer needs. Turner said that the 10 percent commission, combined with personal exhortation by the sales executives on a one-to-one basis should provide adequate motivation. Dethridge responded that his inside sales force were not at present eligible for commissions—only the outside sales force earned commissions. With an inside sales force of seven, he did not feel that he had time to motivate that many people on-a one-to-one basis. In addition, he believed that group motivation activities were often more effective because of the competitive team spirit engendered. He was not trying to tell Turner how to conduct his meetings with the eight-person outside sales force, but he would like to include motivational material in his own meetings. Turner did not immediately approve the proposed change, but he promised to take the matter under advisement.
Source: Richard R. Still, Edward W. Cundliff, Normal A. P Govoni, Sandeep Puri (2017), Sales and Distribution Management: Decisions, Strategies, and Cases, Pearson; Sixth edition.