Ch03 - Sales Opportunity Management

Part II

SALES FORCE ACTIVITIES Chapter 3:

Sales Opportunity in Management

Sales Opportunity Management

Generating New Accounts

Managing Existing Accounts

Sales Versus Profits

Personal Time Management

Generating New Accounts

What Creates Satisfied Customers? Mergers and Acquisitions 10% Introducing New Products

42% 15%

Acquiring New Customers

42% Increasing Business with Existing Customers

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?

4

Customer’s Application or Project Customer’s Business Profile Customer’s Financial Condition Access to Funds

5

Compelling Event

1 2 3

Developing a Prospect List 1. Direct Inquiry Advertising Direct Mail Trade publications Trade shows

2. Directories – Thomas Register 3. Referrals 4. Cold Canvassing

Qualifying Prospects

1. Needs for your products/services 2. Authority to make purchase 3. Credit rating & ability to pay 4. Rating scale applied to characteristics by each salesperson

Siebel Systems, Inc.: Assessing the Opportunity Is There an Opportunity?

4

Customer’s Application or Project Customer’s Business Profile Customer’s Financial Condition Access to Funds

5

Compelling Event

1 2 3

Can We Compete? 6

Formal Decision Criteria

7

Solution Fit

8

Sales Resource Requirements

9

Current Relationship

10

Can We Win?

Unique Business Value

Is it Worth Winning?

11

Inside Support

16

Short-Term Revenue

12

Executive Credibility

17

Future Revenue

13

Cultural Compatibility

18

Profitability

14

Informal Decision Criteria

19

Degree of Risk

15

Political Alignment

20

Strategic Value

Managing Existing Accounts Is the account too small?

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

Compensation Salary, commissions, and bonus Fringe benefits (hospital, life insurance, social security)

$69,035 $10,985

$80,020

Direct Selling Expenses Automobile

8,000

Lodging and meals

6,250

Entertainment

3,250

Communications

4,500

Samples, promotional material

1,750

Miscellaneous

1,700

Total Direct Expenses

25,450 $105,470

Calls Per Year Total available days

260 days

Less: Vacation

10 days

Holidays

10 days

Sickness

5 days

Meetings

18 days

Training

12 days

Net Selling Days Average calls per day Total Calls per Year (205 X 3) Average Cost per Call ($105,470/615)

55 days 205 days 3 calls 615 Calls $171.50

Sales Opportunity Management Key to Productivity

Breakeven 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 Sales Costs as Industry

Cost per Call

Number of Calls Needed to Close a Sale

a Percentage of 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 Printing/Publishin g

25.00

3.7

2.4

70.10

4.5

22.2

248.20

4.7

3.6

Rubber/Plastic

Sales Opportunity Management Selected Break-Even Results Industry Business Services Chemicals Construction Electronics Food Products Instruments Machinery Office Equipment Printing/Publishing Rubber/Plastics

Breakeven 1,096.37 15,474.67 9,730.00 433.25 6,580.00 11,629.13 1,580.77 616.67 3,811.61 41,662.14

Now what? Setting Priorities?

Methods for Setting Account Priorities  Single-Factor Model  Portfolio Models  Decision Models  Sales 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)

A

21

15%

$910

65%

105

B

28

20%

$280

20%

140

C

91

65%

$210

15%

455

Totals

140

100% $1400 100%

700

Sales ($) per Call (6)

$866 7 $200 0 $462 $200 0 (Avg.)

Portfolio Model Competitive Position

Strong Core Accounts High Account Opportunit y

 Accounts are Very Attractive  Invest Heavily in Selling Resources

Drag Accounts Low

 Accounts are moderately Attractive  Invest to maintain current competitive

Weak Growth Accounts Accounts are Potentially Attractive May Want to Invest Heavily

Problem Accounts

Accounts are Very Unattractive Minimal Investment of

Customer Break-Even Analysis (Decision Models) Average Sales Volume Per Month $9,784 $8,153

C

$6,522 $4,891 $3,261

A

$1,630

B 1

2

3

4

5

6

Number of Sales Calls Per Month

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

Traditional Model 100,000 Catalog Drops

Internet Model 100,000 Website Visits

5,000 Calls

10,000 Calls

2,000 Orders

500 E-Orders

1,750 Orders

Big Difference?

When Systematic Biases Are Likely to Exist Source of Bias Customer

Company

Salespeople Who…

Are More Likely To

Have low-sales potential, demanding customers Have customers with high service needs or needs that the salesperson can’t meet on his or her own Have territories with too many high-sales potential accounts

Spend too much time with them.

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.

Focus on customers whose needs they can easily meet on their own. Have low penetration or share as a result of poor coverage.

When Systematic Biases Are Likely to Exist (cont.) Source of Bias Sales Manager

Salesperson

Salespeople Who…

Are More Likely To

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

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:

Time Allocation: Customer Sales Strength Footwear, Inc. Accounts Top 10

Sales Last Year $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

 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 Analysis Number of Accounts

Total Sales Volume

10

$150,000

10

56,250

10

Percent of Sales

Sales per Account

9%

$15,000

15.2

9

5,625

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

99%

$ 3,364

110

$370,000

40.5%

Percent of Account

100.0%

Accounts

Call Pattern

Total Number of Calls

Top 10

Every other week

260

29.6%

Next 10

Once a month

120

13.6

468.75

Next 10

Once a month

120

23.6

462.50

Next 20

110

12.5

340.91

110

12.5

336.36

Next 20

About every 2 mos. About every 2 mos. Once a quarter

80

9.1

234.38

Last 20

Once a quarter

80

9.1

187.50

Next 20

880

Percent Of Calls

Sales Per Call $576.92

100.0%

$420.45

Time Management Importance High

Urgenc y

H igh Low

Low

Emergencies Time Wasters Personal Growth

Recreation