01 Jul MKTG586 Montclair Module 7 Product Sales Promotions Assignment
Question Description
When is a sale a sale? Is it when the contract is signed, the product delivered, payment is received, or … perhaps something else? On the surface this may sound like a trivial question, but for sales organizations it is a big deal. The reason is that salesperson performance and rewards are linked to the sale and when the sale is credited to the salesperson can make a big difference in performance evaluations and ultimately compensation, as well as a firm’s financial statements. Remember that a sale to a salesperson is revenue to a firm!
An interesting twist to the question “When is a sale a sale?” relates to periodic promotions or sales contests. That is, it is common for B2B firms to run cost-reduction promotions to their customers from time to time. This is done for a variety of reasons from new product introductions to beating competitors to reducing overstocks. Along with the temporary promotional prices, a sales contest might also be included that provides attractive prizes for salespeople who achieve different levels of sales performance during the contest. New salespeople, being smart and highly competitive, will often be tempted in such cases to go to their buyers and ask them to “load up” during the promotion or contest so that the salesperson can “win,” which brings up an ethical dilemma: If I’m simply borrow ing business from the future with a customer in order to win a sales contest, have I really done a service to the firm or to my customer? Yes, I might gain some benefit temporarily from this behavior but in many cases I won’t see another order on the promoted products for a very long time. And from the customer’s side, while they may agree to load up to try to help you out , the truth is customers don’t want to have extra inventory sitting around and their doing you a favor this time may create ill will in the long term.
Bottom line, a salesperson must think seriously about the potential for damaging a relationship with a customer and also about whether loading up customers this quarter just creates difficulties in making quota in subsequent quarters , Then too, from a sales organizational perspective, changes in accounting reporting standards (FASB) and legislation such as Sarbanes-Oxley have mandated companies present a more realistic picture of their financial performance, heightening the issue of when a sale is a sale. Companies train sales managers who in turn are expected to make it clear to the salespeople the policies and procedures for accurately reporting a sale.
Question to Ponder:
What is your viewpoint on loading up customers during product promotions and sales contests? Consider the pros and cons and come to a conclusion on how this issue is best handled. One Page
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