STRATEGIC SALES MANAGEMENT

The world of selling must accommodate a dramatically changed world of buying

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Territory Analysis

Why Do It?
To obtain thorough coverage of the market To establish territory responsibilities To evaluate Performance To improve customer relations To reduce cost/increase profitability To allow better salesforce/customer matching

Target Account Strategy

SALES STRATEGY

TARGET ACCOUNTS

Undifferentiated Account Approach

Target Account Strategy

Account Account 1 2 Account Account 3 4

SALES STRATEGY

Account Segmentation Approach

Key Account Profitability Size Potential

Expected Value Analysis

Determination of product potential on an account by account basis. Estimates of Market Share and Probability are based upon the judgement of the salesperson and
Amount of past sales Degree and kind of competition Product,Price, and Service commitments Economic conditions Existing account relationships

Expected Value of an Account

EV=

PPV x (SES x PES)

EV=Expected value PPV= Potential Product Volume SES= Salesperson Estimated Share PES= Probability of getting expected share

Account A B C D

SES 30% 40% 50% 60%

PES .2 .4 .3 .1

Expected Share-% 6% 16% 15% 6% 43%

Expected Value

EV=PPV X Expected Share

$60,000 X .43 = $25,800

Sales Force Quality Impacts Financial Performance

Value of Quality Sales Force Increases as: Customer pressure intensify Sources of Product differentiation dry up Supply Chain Functions become more integrated

Sales Strategy is most important when

Product is differentiated Product is New Product is late in life cycle Product is undifferentiated

High

Low High Low

Amount of Product Differentiation Product Life Cycle

From Product Power to Customer Power

Over time sources of of MFG. Profitability change Early one profits are proportional to account size

Consolidation in most customer industries has led to much more concentration at the top of the account triangle

Shift in customer buying power requires shift in Sales Strategy

Major Accounts
Price Pressure

Middle Accounts

Mini-Accounts

Cost Pressure

Number of Accounts

Key Determinants of Account Profitability

Account Retention Account Dominance Realized Price Selling and Service Cost Account Selection

Something OldSomething New

Get New Accounts Get the Order Pressure Firm to cut Price Give Service to Get Sales Manage all accounts the same way Sell to Anyone

Retain Existing Accounts Become the Preferred Supplier Price for Profit Manage for Profitability Manage each account for maximum long term profitability Concentrate on High Profit Potential accounts

Role of the Salesperson

Which Accounts? Which Products and Services? What Specific Activities are to be accomplished? What are the key interactions with other parts of the company?

Make the Sales Task Clear

Product Product Product A B C Account Task A1 Task B1 Task C1 Type 1 Account Task B2 Type 2 Account Task C3 Type 3

Sales Force Architecture

How many different sales forces should we have? How should the sales force be structured? What degree of specialization is needed? What are the sales force resource requirements?

Sales Management must function as a system

Measurement Systems
Skill Creation Systems Motivation Systems Management Systems

Rethinking The Role of the Sales Force

Return on Investment Sales Process Control Integrated Customer Management Technology Assisted Selling Performance Management

Direct versus Indirect Salesforce

Internal cost exceeds market cost Governance cost difference Production/distribution cost difference

Total cost difference Production/distribution and governance

Asset specificity Market cost exceeds internal cost

Market preferred

Integration preferred

Critical point

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Economies of adding Value Situation Analysis Delegation of Channel Functions

Pricing Communicate Service Distribution Customize

Governance Cost of Channel Managment

Collecting

Research

KEY CHANNEL MANAGERIAL ISSUES

* Understanding Customer Need Requirements * Establishing Channel Objectives * Direct versus Indirect Channel Alternatives * Economic Consequences * Evaluating Channel Performance

WHO IS THE CUSTOMER?

Multiple Customer Bases Create Complex Interactions SUPPLIER

DISTRIBUTION CHANNEL A

DISTRIBUTION CHANNEL B

INDIVIDUAL CUSTOMER

INDUSTRIAL CUSTOMER

Growth in Multi-channel Systems

Selling Costs Just in Time Inventory Management Supply Chain Systems Information Technology

Channels Members add Value to the Exchange Process

Suppliers Local market Knowledge Local inventory and distribution outlets Exchange efficiencies Financial Services

Customers Expert advice Credit Accessibility Warranty/ Guarantees

Control vs. Financial Resources in Channel Design

Financial Resources High More Financial Resources Required and more control Suppliers Control

Few

LOW

Less Financial Resources Required and more control

Many

Distributors Economic Role

Manufacturer

Distributor Transferred Business Costs

Customer

Transferred Business Costs

$ Inventory $ Order Handling $ Selling $Credit

$ Inventory $Freight $Storage $Order Handling

Distribution Strategies
Intensive Distribution Newspapers,Books, magazines Packaged goods Auto parts Selective Distribution Consumer Durables Sevices Exclusive Distribution Rolls royce Dealers

Manufacturers Representatives

Independent firm Bears all selling expenses Sells on commission basis Does not carry competing lines Replaces or supplements the direct sales force Does not take title to the goods

Distributors Beliefs about Factors

High cost of carrying inventory Inefficient marketing Costs Increasing distribution costs Pressure to increase volume and market share Increased distributor services. Lower operating costs of purchasing.

Internal cost exceeds market cost Governance cost difference

Production/distribution cost difference

Total cost difference Production/distribution and governance

Asset specificity Market cost exceeds internal cost

Market preferred

Integration preferred

Critical point