Part II SALES FORCE ACTIVITIES Chapter 3: Sales Opportunity in Management

Sales Opportunity Management Generating New Accounts Managing Existing Accounts Personal Time Management Sales Versus Profits

Generating New Accounts

What Creates Satisfied Customers? Acquiring New Customers Mergers and Acquisitions Introducing New Products Increasing Business with Existing Customers 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? 1 Customer’s Application or Project 2 Customer’s Business Profile 3 Customer’s Financial Condition 4 Access to Funds 5 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? 1Customer’s Application or Project 2Customer’s Business Profile 3Customer’s Financial Condition 4Access to Funds 5Compelling Event Can We Compete? 6Formal Decision Criteria 7Solution Fit 8Sales Resource Requirements 9Current Relationship 10Unique Business Value Can We Win? 11Inside Support 12Executive Credibility 13Cultural Compatibility 14Informal Decision Criteria 15Political Alignment Is it Worth Winning? 16Short-Term Revenue 17Future Revenue 18Profitability 19Degree of Risk 20Strategic Value

Managing Existing Accounts Is the account too small?

Table 3-1 Computing the Cost per Call for an Industrial Products SalespersonCompensation Salary, commissions, and bonus$69,035 Fringe benefits (hospital, life insurance, social security)$10,985$80,020 Direct Selling Expenses Automobile8,000 Lodging and meals6,250 Entertainment3,250 Communications4,500 Samples, promotional material1,750 Miscellaneous1,70025,450 Total Direct Expenses$105,470 Calls Per Year Total available days260 days Less: Vacation10 days Holidays10 days Sickness5 days Meetings18 days Training12 days55 days Net Selling Days205 days Average calls per day3 calls Total Calls per Year (205 X 3)615 Calls Average Cost per Call ($105,470/615) $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 IndustryCost per Call Number of Calls Needed to Close a Sale Sales Costs as a Percentage of Total Sales Business Services $ % Chemicals Construction Electronics Food Products Instruments Machinery Office Equipment Printing/Publishing Rubber/Plastic

Sales Opportunity Management Selected Break-Even Results IndustryBreakeven Business Services1, Chemicals15, Construction9, Electronics Food Products6, Instruments11, Machinery1, Office Equipment Printing/Publishing3, Rubber/Plastics41,662.14

Now what? Setting Priorities?

Methods for Setting Account Priorities Single-Factor Model Single-Factor Model Portfolio Models Portfolio Models Decision Models Decision Models Sales Process 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) A2115%$91065%105$8667 B2820%$28020%140$2000 C9165%$21015%455$462 Totals140100%$ %700 $2000 (Avg.)

Portfolio Model Competitive Position StrongWeak Account Opportunity High Core Accounts Accounts are Very Attractive Accounts are Very Attractive Invest Heavily in Selling Resources Invest Heavily in Selling Resources Growth Accounts Accounts are Potentially Attractive Accounts are Potentially Attractive May Want to Invest Heavily May Want to Invest Heavily Low Drag Accounts Accounts are moderately Attractive Accounts are moderately Attractive Invest to maintain current competitive position Invest to maintain current competitive position Problem Accounts Accounts are Very Unattractive Accounts are Very Unattractive Minimal Investment of Selling Resources Minimal Investment of Selling Resources

Customer Break-Even Analysis (Decision Models) A C B $1,630 $3,261 $4,891 $6,522 $8,153 $9,784 Average Sales Volume Per Month Number of Sales Calls Per Month

How Dell Achieves Selling Efficiencies (Example of Sales Process Model) Traditional Model Internet Model 100,000 Catalog Drops 100,000 Catalog Drops 10,000 Calls 10,000 Calls 2,000 Orders 2,000 Orders 100,000 Website Visits 100,000 Website Visits 5,000 Calls 5,000 Calls 500 E-Orders 500 E-Orders 1,750 Orders 1,750 Orders

Big Difference?

When Systematic Biases Are Likely to Exist Source of BiasSalespeople 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 BiasSalespeople 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

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 best56,250 Next 10 best55,500 Next 20 best37,500 Next 20 best37,500 Next 20 best18,750 Last 2015,000 $370,000 Time Allocation: Customer Sales 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 Analysis Number of Accounts Total Sales Volume Percent of Sales Percent of Account Sales per Account 10$150, %9%$15, , , , , , , , , , , $370, %99%$ 3,364 AccountsCall Pattern Total Number of Calls Percent Of Calls Sales Per Call Top 10Every other week %$ Next 10Once a month Next 10Once a month Next 20About every 2 mos Next 20About every 2 mos Next 20Once a quarter Last 20Once a quarter %$420.45

Time Management Importance HighLow Urgency HighEmergencies Time Wasters Low Personal Growth Recreation