Part IIPart II

SALES FORCE SALES FORCE ACTIVITIESACTIVITIES

Part IIPart II

SALES FORCE SALES FORCE ACTIVITIESACTIVITIES

Chapter 3:Chapter 3:

Sales Opportunity in Sales Opportunity in ManagementManagement

Sales Opportunity Management

GeneratingNew

Accounts

ManagingExistingAccounts

PersonalTime

Management

Sales VersusProfits

Generating New Accounts

What CreatesSatisfied Customers?

AcquiringNew Customers

Mergers andAcquisitions

IntroducingNew Products

IncreasingBusiness withExisting Customers

42%

42%

10%

15%

Prospect Profile

Disposable Medical Supply Distributor

Multiple-practice physician office

Internal medicine, family practice

Suburban location

New practice -- less than 5 years

Good credit history

Currently purchases from a full-service distributor

Siebel Systems, Inc.: Opportunity Assessment

Is There an Opportunity?Is There an Opportunity?

11Customer’s Application or Customer’s Application or ProjectProject

22 Customer’s Business ProfileCustomer’s Business Profile

33Customer’s Financial Customer’s Financial ConditionCondition

44 Access to FundsAccess to Funds

55 Compelling EventCompelling Event

Developing a Prospect List

1. Direct Inquiry1. Direct InquiryAdvertisingAdvertising

Direct MailDirect Mail

Trade publicationsTrade publications

Trade showsTrade shows

2. Directories – Thomas 2. Directories – Thomas RegisterRegister

3. Referrals3. Referrals

4. Cold Canvassing4. Cold Canvassing

Qualifying Prospects

1.1. Needs for your products/servicesNeeds for your products/services

2. 2. Authority to make purchaseAuthority to make purchase

3. 3. Credit rating & ability to payCredit rating & ability to pay

4. 4. Rating scale applied to Rating scale applied to

characteristics by each characteristics by each

salespersonsalesperson

Siebel Systems, Inc.:Assessing the Opportunity

Is There an Opportunity?Is There an Opportunity?

1Customer’s Application or Project

2 Customer’s Business Profile

3Customer’s Financial Condition

4 Access to Funds

5 Compelling Event

Can We Compete?Can We Compete?

6 Formal Decision Criteria

7 Solution Fit

8 Sales Resource Requirements

9 Current Relationship

10 Unique Business Value

Can We Win?Can We Win?

11 Inside Support

12 Executive Credibility

13 Cultural Compatibility

14 Informal Decision Criteria

15 Political Alignment

Is it Worth Winning?Is it Worth Winning?

16 Short-Term Revenue

17 Future Revenue

18 Profitability

19 Degree of Risk

20 Strategic Value

Managing Existing Accounts

Is the account too small?Is the account too small?

Table 3-1 Computing the Cost per Call for an Industrial Products Salesperson

CompensationCompensation

Salary, commissions, and bonus $69,035

Fringe benefits (hospital, life insurance, social security) $10,985 $80,020

Direct Selling ExpensesDirect Selling Expenses

Automobile 8,000

Lodging and meals 6,250

Entertainment 3,250

Communications 4,500

Samples, promotional material 1,750

Miscellaneous 1,700 25,450

Total Direct Expenses $105,470

Calls Per YearCalls Per Year

Total available days 260 days

Less:

Vacation 10 days

Holidays 10 days

Sickness 5 days

Meetings 18 days

Training 12 days 55 days

Net Selling Days 205 days

Average calls per day 3 calls

Total Calls per Year (205 X 3) 615 Calls

Average Cost per Call ($105,470/615)Average Cost per Call ($105,470/615) $171.50

Sales Opportunity ManagementKey to Productivity

Breakeven Sales VolumeBreakeven Sales Volume

(Cost per Call) x (Number of Calls to Close)

Sales Calls as a % of Sales

Table 3-2 Selected Statistics on Cost per Call and Number of Calls Needed to Close a Sale

IndustryIndustryCost Cost

per Callper Call

Number of Number of Calls Needed Calls Needed

to Close a Sale to Close a Sale

Sales Costs as Sales Costs as aa

Percentage ofPercentage of

Total Sales Total Sales

Business Services $ 46.00 4.6 10.3%

Chemicals 165.80 2.8 3.4

Construction 111.20 2.8 7.2

Electronics 133.30 3.9 12.6

Food Products 131.60 4.8 2.7

Instruments 226.00 5.3 14.8

Machinery 68.50 3.0 11.3

Office Equipment 25.00 3.7 2.4

Printing/Publishing 70.10 4.5 22.2

Rubber/Plastic 248.20 4.7 3.6

Sales Opportunity ManagementSelected Break-Even Results

IndustryIndustry BreakevenBreakeven

Business Services 1,096.37

Chemicals 15,474.67

Construction 9,730.00

Electronics 433.25

Food Products 6,580.00

Instruments 11,629.13

Machinery 1,580.77

Office Equipment 616.67

Printing/Publishing 3,811.61

Rubber/Plastics 41,662.14

Now what?

Setting Priorities?Setting Priorities?

Methods for Setting Account Priorities

Single-Factor ModelSingle-Factor Model

Portfolio ModelsPortfolio Models

Decision ModelsDecision Models

Sales Process ModelsSales Process Models

ABC Account Classification (Single Factor Model)

Account Classif.

# of Account

s(1)

Total Account

s(2)

Sales (000)(3)

Total Sales

(4)

Total Calls per Classif.

(5)

Sales ($) per Call (6)

AA 2121 15%15% $910$910 65%65% 105105 $866$86677

BB 2828 20%20% $280$280 20%20% 140140 $200$20000

CC 9191 65%65% $210$210 15%15% 455455 $462$462

TotalsTotals 140140 100%100% $1400$1400 100%100% 700700$200$200

0 0 (Avg.)(Avg.)

Portfolio Model

Competitive PositionCompetitive Position

StrongStrong WeakWeak

Account Account OpportunitOpportunityy

HighHigh

Core AccountsCore Accounts Accounts are Very Accounts are Very

AttractiveAttractive Invest Heavily in Invest Heavily in

Selling ResourcesSelling Resources

Growth Growth AccountsAccounts

Accounts are Accounts are Potentially AttractivePotentially Attractive

May Want to Invest May Want to Invest HeavilyHeavily

LowLow

Drag AccountsDrag Accounts Accounts are Accounts are

moderately Attractivemoderately Attractive Invest to maintain Invest to maintain

current competitive current competitive positionposition

Problem Problem AccountsAccounts

Accounts are Very Accounts are Very UnattractiveUnattractive

Minimal Investment of Minimal Investment of Selling ResourcesSelling Resources

Customer Break-Even Analysis(Decision Models)

A

C

B

1 2 3 4 5 6

$1,630

$3,261

$4,891

$6,522

$8,153

$9,784

Average Sales Volume Per MonthAverage Sales Volume Per Month

Number of SalesNumber of SalesCalls Per MonthCalls Per Month

How Dell Achieves Selling Efficiencies(Example of Sales Process Model)

Traditional ModelTraditional Model Internet ModelInternet Model

100,000Catalog Drops

100,000Catalog Drops

10,000Calls

10,000Calls

2,000Orders

2,000Orders

100,000Website Visits

100,000Website Visits

5,000Calls

5,000Calls

500E-Orders

500E-Orders

1,750Orders

1,750Orders

Big Difference?

When Systematic Biases Are Likely to Exist

Source of Bias

Salespeople Who… Are More Likely To

Customer Have low-sales potential, demanding customers

Spend too much time with them.

Have customers with high service needs or needs that the salesperson can’t meet on his or her own

Focus on customers whose needs they can easily meet on their own.

Company Have territories with too many high-sales potential accounts

Have low penetration or share as a result of poor coverage.

Have little information about the potential of different accounts

Spend their effort where the current sales are highest.

Have very little cash compensation at risk in the incentive plan

Expend too little energy customizing sales actions for individual customers.

When Systematic Biases Are Likely to Exist (cont.)

Source of Bias

Salespeople Who… Are More Likely To

Sales Manager

Are managed by the number of calls they make

Spend too much time with friendly customers irrespective of potential.

Are left alone to decide what to do

Have high variability in the quality of precision selling

Salesperson Have difficulty handling rejection and customer objections

Shy away from difficult accounts.

Are making good progress toward making quota

Seek the high-probability, low volume account.

Have made quota relatively early in the period

Seek the low-probability, high volume account.

Time Allocation

Time Allocation

As a salesperson for Strength Footwear, Inc., you have been very successful.

Your commissions are well over $70,000 a year. Demand for your product line is very strong, but so is the demand on your time.

You work your territory 220 days a year and can make 4 calls a day. The maximum number of times you need to see any account is every other week, but you need to call on each account at least once a quarter.

To help you allocate your time according to sales results, you have gathered the following information on customer sales:

AccountsSales Last

Year

Top 10 $150,000

Next 10 best 56,250

Next 10 best 55,500

Next 20 best 37,500

Next 20 best 37,500

Next 20 best 18,750

Last 20 15,000

$370,000

Time Allocation: Customer Sales

Strength Footwear, Inc.Strength Footwear, Inc. Develop and

justify a call schedule for allocating time across the 110 customers in your territory.

What additional information should you consider in allocating your time?

Time Allocation AnalysisNumber of Accounts

Total Sales Volume

Percentof Sales

Percent of Account

Sales per Account

10 $150,000 40.5% 9% $15,000

10 56,250 15.2 9 5,625

10 55,500 15.0 9 5,550

20 37,500 10.1 18 1,875

20 37,000 10.0 18 1,850

20 18,750 5.1 18 938

20 15,000 4.1 18 750

110 $370,000 100.0% 99% $ 3,364

Accounts Call PatternTotal Number

of CallsPercentOf Calls

SalesPer Call

Top 10 Every other week 260 29.6% $576.92

Next 10 Once a month 120 13.6 468.75

Next 10 Once a month 120 23.6 462.50

Next 20 About every 2 mos.

110 12.5 340.91

Next 20 About every 2 mos.

110 12.5 336.36

Next 20 Once a quarter 80 9.1 234.38

Last 20 Once a quarter 80 9.1 187.50

880 100.0% $420.45

Time Management

ImportanceImportance

HighHigh LowLow

UrgencUrgencyy

HigHighh

EmergenciesEmergencies Time WastersTime Wasters

LowLow Personal Personal GrowthGrowth RecreationRecreation