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?
1 2 3 4 Customers Application or Project Customers Business Profile Customers Financial Condition Access to Funds

Compelling Event

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?
1 2 3 4 Customers Application or Project Customers Business Profile Customers Financial Condition Access to Funds 6 7 8 9 10

Can We Compete?
Formal Decision Criteria Solution Fit Sales Resource Requirements Current Relationship Unique Business Value

Compelling Event

Can We Win?
11 Inside Support 16

Is it Worth Winning?
Short-Term Revenue

12
13 14 15

Executive Credibility
Cultural Compatibility Informal Decision Criteria Political Alignment

17
18 19 20

Future Revenue
Profitability Degree of Risk Strategic Value

Managing Existing Accounts

Is the account too small?

Table 3-1

Computing the Cost per Call for an Industrial Products Salesperson

$69,035 $10,985 $80,020

Compensation Salary, commissions, and bonus Fringe benefits (hospital, life insurance, social security) Direct Selling Expenses Automobile Lodging and meals Entertainment Communications Samples, promotional material Miscellaneous Total Direct Expenses Calls Per Year Total available days Less: Vacation Holidays Sickness Meetings Training 10 days 10 days 5 days 18 days 12 days 55 days 260 days 8,000 6,250 3,250 4,500 1,750 1,700 25,450 $105,470

Net Selling Days

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

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
Cost per Call $ 46.00 165.80 111.20 133.30 131.60 226.00 68.50 25.00 70.10 248.20 Number of Calls Needed to Close a Sale 4.6 2.8 2.8 3.9 4.8 5.3 3.0 3.7 4.5 4.7 Sales Costs as a Percentage of Total Sales 10.3% 3.4 7.2 12.6 2.7 14.8 11.3 2.4 22.2 3.6

Industry Business Services Chemicals Construction Electronics Food Products Instruments Machinery Office Equipment Printing/Publishing Rubber/Plastic

Sales Opportunity Management

Selected Break-Even Results
Industry Breakeven

Business Services
Chemicals Construction Electronics Food Products Instruments Machinery

1,096.37
15,474.67 9,730.00 433.25 6,580.00 11,629.13 1,580.77

Office Equipment
Printing/Publishing Rubber/Plastics

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 Accounts (1) Total Accounts (2) Sales (000) (3) Total Sales (4)
Total Calls per Classif. (5)

Sales ($) per Call (6)

A B C Totals

21 28 91 140

15% 20% 65% 100%

$910 $280 $210 $1400

65% 20% 15% 100%

105 140 455 700

$8667 $2000 $462 $2000 (Avg.)

Portfolio Model
Competitive Position

Strong
Core Accounts High
Account Opportunity
Accounts are Very Attractive Invest Heavily in Selling Resources

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

Drag Accounts

Low

Accounts are moderately Attractive Invest to maintain current competitive

Problem Accounts
Accounts are Very Unattractive Minimal Investment of Selling Resources

Customer Break-Even Analysis (Decision Models)

Average Sales Volume Per Month
$9,784 $8,153 $6,522 $4,891 $3,261 $1,630

A 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

10,000 Calls

5,000 Calls

2,000 Orders

500 E-Orders

1,750 Orders

Big Difference?

When Systematic Biases Are Likely to Exist

Source of Bias Salespeople Who Customer
Have low-sales potential, demanding customers Have customers with high service needs or needs that the salesperson cant meet on his or her own

Are More Likely To

Spend too much time with them. Focus on customers whose needs they can easily meet on their own. Have low penetration or share as a result of poor coverage. Spend their effort where the current sales are highest. Expend too little energy customizing sales actions for individual customers.

Company

Have territories with too many high-sales potential accounts Have little information about the potential of different accounts Have very little cash compensation at risk in the incentive plan

When Systematic Biases Are Likely to Exist (cont.)

Source of Bias Salespeople Who Sales Manager
Are managed by the number of calls they make Are left alone to decide what to do

Are More Likely To

Spend too much time with friendly customers irrespective of potential. Have high variability in the quality of precision selling Shy away from difficult accounts.

Salesperson

Have difficulty handling rejection and customer objections Are making good progress toward making quota Have made quota relatively early in the period

Seek the high-probability, low volume account. 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 Next 10 best Next 10 best Sales Last Year $150,000 56,250 55,500

Develop and

Next 20 best
Next 20 best Next 20 best Last 20

37,500
37,500 18,750 15,000 $370,000

justify a call schedule for allocating time across the 110 customers in your territory. information should you consider in allocating your time?

What additional

Time Allocation Analysis

Number of Accounts 10 10 10 20 20 20 20 110 Total Sales Volume $150,000 56,250 55,500 37,500 37,000 18,750 15,000 $370,000 Percent of Sales 40.5% 15.2 15.0 10.1 10.0 5.1 4.1 100.0% Total Number of Calls 260 120 120 110 110 80 80 880 Percent of Account 9% 9 9 18 18 18 18 99% Percent Of Calls 29.6% 13.6 23.6 12.5 12.5 9.1 9.1 100.0% Sales per Account $15,000 5,625 5,550 1,875 1,850 938 750 $ 3,364 Sales Per Call $576.92 468.75 462.50 340.91 336.36 234.38 187.50 $420.45

Accounts Top 10 Next 10 Next 10 Next 20 Next 20 Next 20 Last 20

Call Pattern Every other week Once a month Once a month About every 2 mos. About every 2 mos. Once a quarter Once a quarter

Time Management
Importance High High Urgency Low Emergencies Low Time Wasters

Personal Growth

Recreation