1. Part II SALES FORCE ACTIVITIES
Chapter 3:
Sales Opportunity Management

2. Sales opportunity management
One way to increase productivity is to focus sales force time on those prospects that have a probability of becoming an important customers.

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

4. A process for generating new accounts
Business places a lot of emphasis on growing by getting closer to the present customers. Although this is an important opportunity to businesses , many companies focus on finding new customers to achieve their growth objectives.

5. A process for generating new accounts
No matter how strong your products , how great your customer service , or how aggressive your sales force, business lose customers every year when companies are bought and sold , management changes and global economies fluctuate.

6. A process for generating new accounts
The key to building sales through prospecting is to spend time with prospects that are likely to become good customers. So an important first step in acquiring new customers is for the salespeople to build a good prospects profile.

7. What Creates Satisfied Customers?
Mergers and
Acquisitions
10%
Acquiring
New Customers
42%
Introducing
New Products
15%
42%
Increasing
Business with
Existing Customers
Figure 3-1: What’s the Best Way to Grow?

8. Building a prospect Profile
Not all businesses will want or need your products and services, some prospects will be a waste of your time, while others will not buy enough to make it worth your time.
The salespeople should decide what factors determine who is a good prospects. That’s mean building a prospect profile.

9. Building a prospect Profile
A profile of what the best prospect looks like.
There are many factors help in building the prospect profile include the following:
Size of the business
Age of the equipment to be replaced
Geographic distance from shipping points
Product line specialty

10. Building a prospect list
The next step is to develop a list of prospects matching the profile developed in the first step.
The traditional way in generating prospects through cold canvassing
Cold Canvassing: Involves contacting prospective customers without appointment.

11. Building a prospect list
Salespeople selling office supplies , paper supplies use this approach as the target markets for these products are fairly broad.
The drawback is that the salesperson could waste time soliciting low quality prospects, Canvassing maybe more efficiently accomplished by phone.

12. Building a prospect list
There are many methods used to identify the good prospects include direct inquiries, trade shows, Directories, internet and referrals

13. Building a prospect list
Direct mail
_ All companies receive direct inquiries about products or services from potential customers.
_ Direct mail is an excellent way for locating prospective customers.
_ The use of inquiries has made it possible to increase the speed with which companies can respond to a direct mail inquiry, which helps to increase the rate at which inquiries are converted to sales.

14. Building a prospect list
Trade shows
_ Are also an excellent way for generating good prospects.
_ There are two reasons in growing the popularity of the trade shows which are:
Low cost per customer contact.
The organization can project a coherent and consistent message to all the prospects
Note : trade shows don’t permit the writing of orders.

15. Building a prospect list
Directories
_ Special direct inquiry directories and open to bid announcement are important sources of leads for many firms.
Internet
_ It has revolutionized the process of selling and qualifying prospects.

16. Building a prospect list
Referrals
_ With referrals, a satisfied customers is asked to provide the names of others who might be interested in the product.
_ The person may also supply an introduction of the salesperson to the prospects.
_ The advantage of referrals is that the person can say things about the salesperson and the product line that might not be as credible coming directly from the salesperson.

17. Qualifying Prospects
Qualify a prospect: determine if the prospect is likely to be converted to a buying customer.
Salesperson needs information about customer needs , buying authority and ability to pay.

18. Qualifying Prospects Needs:
_ Qualified leads are those that have a use for the seller’s goods or services and are planning to buy in the near future.
_ A prospect that is satisfied with the present supplier and has no desire to change is going to be very difficult to convert into the customer.

19. Qualifying Prospects Buying Authority:
_ Business to Business salespeople often have problems identifying who has the authority to buy within an organization because of the number of people involved in making a purchasing decision.

20. Qualifying Prospects Ability to Pay:
_ Finding prospects that want a product and also have the authority to buy will not be productive if they lack the financial resources to buy.
_ Salespeople should make an initial screening of prospects on their ability to buy, the objective is to eliminate prospects who represent too high a credit risk.

21. Managing existing account
Generating new customer is important, but many sales and marketing managers feel that the companies that will prosper will be ones that maintain strong customer loyalty

22. When is an account too small?
An important starting point in managing existing account is determining the minimum opportunity on which the salespeople should spend their time.
Salespeople who are supplied with the necessary direct selling expense information are in an excellent position to perform a minimum account size analysis.

23. When is an account too small?
This analysis involves two steps:
Calculating a personal cost per sales call
Breakeven sales volume.

24. Cost per call
Is a function of the numbers of call the salespeople make per day, the number of days available to call on customers , and your direct selling expenses include such expenses as compensation , travel, entertainment and communications, these expenses are referred to as direct selling expenses.

25. Table 3-1 Computing the Cost per Call for an Industrial Products Salesperson
Compensation
Salary, commissions, and bonus
$69,035
Fringe benefits (hospital, life insurance, social security)
$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
25,450
Total Direct Expenses
$105,470
Calls Per Year
Total available days
260 days
Less:
Vacation
10 days
Holidays
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)
$171.50

26. Breakeven sales Volume
Is the sales volume necessary to cover the direct selling expenses, it’s necessary to calculate the breakeven sales volume in order to determine the minimum size customer that should be pursued.
Calculating the breakeven volume requires that we know the number of calls necessary to close a sale and what direct selling expenses are budgeted to be as a percentage of total sales.

27. Sales Opportunity Management Key to Productivity
Breakeven Sales Volume
(Cost per Call) x (Number of Calls to Close)
Sales Calls as a % of Sales

28. Number of Calls Needed to Close a Sale
Table Selected Statistics on Cost per Call and Number of Calls Needed to Close a Sale
Industry
Cost
per Call
Number of Calls Needed to Close a Sale
Sales Costs as a
Percentage of
Total Sales
Business Services $
4.6
10.3%
Chemicals
165.80
2.8
3.4
Construction
111.20
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

29. Sales Opportunity Management Selected Break-Even Results
Industry
Breakeven
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

30. I can’t afford to lose this business
Many factors should be considered before dropping a customer or reducing the selling effort. For example the sales customers may be growing , which may be due to one of two causes:
The customer’s business is growing rapidly , so its need for suppliers is also increasing.
Your sales to this account is increasing because you are getting a larger share of the customer’s business.

31. Methods for setting account priorities
Breakeven account analysis provides a starting place from which to determine the minimum size account that should be called on. But this analysis doesn’t address the issue of how much time should be allocating to each prospects.
There are four methods for setting account priorities along with the situation

32. 1. Single-Factor Model
The easiest and the most widely used model for allocating salespeople’s time is the single factor model
This model examines the single customer characteristics , usually the sales volume to arrive at the allocation of the sales calls.

33. Table 3-3: ABC Account Classification
No. of Total Sales Total Total calls Sales ($)
Account Accts. Accts. (000) Sales Per Classif. Per Call
Classification (1) (2) (3) (4) (5) (6)
A % $ % $8,667
B ,000 C
Totals % $1, % $2,000 (Avg)

34. 1. Single-Factor Model
The main limitation of this models is that they mayn’t include all the factors that should be considered when evaluating an account’s sales potential.
Single factor model is likely to be used in the mature markets, when demand and competition are stable, and it will be appropriate for sales force program with transactional type.

35. 2. Portfolio Model
Attempt to overcome the limitations of the single factor models by considering multiple factors when determining the attractiveness of the individual accounts within a territory.
The portfolio model classifies accounts into one of four categories by determining the account attractiveness based on two criteria

36. 2. Portfolio Model
Account Opportunity: refers to the magnitude of an account’s present and future need for the salesperson’s offering
Competitive position : based on the outcome measures such as the account’s total gross profit dollars.

37. Figure 3-2: PortfolioModel
Competitive Position
Strong
Weak
Core
Accounts
Accounts are very
attractive.
Invest heavily in selling
resources.
Growth
Accounts
Accounts are potentially
attractive.
May want to invest
in heavily
High
Account Opportunity
Drag
Accounts
Accounts are moderately
attractive.
Invest enough to maintain
current position.
Problem
Accounts
Accounts are very
unattractive.
Minimal investment
of selling resources.
Low

38. 2. Portfolio Model Portfolio models offer several benefits:
Help the sales team to identify the important customer issues
Facilitate the communication between salespeople and sales manager
Help isolate the information gaps and set priorities for customer data collection
Force the sales team to think about the future.

39. 2. Portfolio Model
Are most likely used in sales force programs with more of consultative type account relationship strategy where understanding the customer needs and the strength of the relation are very critical

40. 3. Decision Models
Although portfolio models have the advantage of using multiple characteristics to classify accounts, several shortcomings remain:
Accounts must be grouped into four quadrants for the purpose of allocating the sales calls, difference between firms aren’t taken into consideration.
The process doesn’t arrive an optimum allocation of the sales calls

41. 3. Decision Models
Decision models for allocating sales calls overcome these two shortcomings by focusing on the response of each account to the number of the sales calls made over a period of time, these models consist of only two parts, the first part develops the relationship between the number of the sales calls over a period of time and sales to particular account. This is referred to as a Sales Response Function.

42. Figure 3-3: Number of Sales Calls Response Function
$20,000
Dollar Sales per Quarter
$10,000
Number of Sales Calls Per Quarter
Figure 3-3: Number of Sales Calls Response Function

43. 3. Decision Models
The second part of these models uses the individual response function to allocate calls so as to maximize sales.
Essentially, these models continue to allocate sales calls to an account until more sales can be generated by calling on another account.

44. 4. Sales Process Models
Despite the advantages of sophisticated call allocation programs , they aren’t appropriate for all the situations.
Sales process models focus on where the opportunity is currently classified in the selling process.
An example of this model is the sales Funnel, this system categorizes the sales opportunities not accounts, this is necessary because the sales team may have multiple selling objectives at one account at the same time.

45. 4. Sales Process Models
Each sales opportunity is categorized based on the level of uncertainty in meeting the opportunity:
Unqualified Opportunities: data suggest that a possible need exists but this need hasn’t verified with key people in the account.
Qualified Opportunities: must meet four criteria

46. 4. Sales Process Models
The need has been verified with at least one of the buying influences.
There is a confirmed intention to buy a new product or service , replace an existing one, or switch suppliers
Funding of the purchase already exists
There is an identified time frame within which the purchase will be made

47. 4. Sales Process Models
3. Best few Opportunities: all the buyers have been contacted and their needs identified and in your judgment have been developed to make the sale.

48. Figure 3-4: The Sales Funnel19 24 17 20
Unqualified 16 14 23 13 15 21 22 18 12 11
50% closure probability 9 10
Qualified 7 5
75% closure probability 8 6 3 4
90% closure probability
Best few 2 1
Figure 3-4: The Sales Funnel

49. Sales Versus profits
Customers may pay different prices for similar products and services, in other words large customers can demand and get lower prices because a seller cant afford to lose their businesses.
Other customers are simply able to get lower prices because of their negotiation skills and still other customers exploit deals and promotions more than others and “ Forward Buy” which means they buy a large amount of their annual needs at one time when the product is on discount.

50. Customer lifetime value (CLV)
Marketers are starting to adopt customer lifetime value (CLV) as an appropriate metric for measuring marketing performance.
Calculating the CLV requires knowing or making judgments about the following inputs:
1. The company’s discount rate ( Cost of Capital )

51. Customer lifetime value (CLV)
2. The company’s planning Horizon
3. The customer’s product category purchases in each period
4. The average contribution from purchases
5. Each supplier’s share of total category purchases.

52. Time management
Is one of the most mentioned training topics , the reason is that significant productivity gains can be made through better time management.
The following figure shows how salespeople spend their time , the amount of time spent selling either face to face or over the phone

53. Figure 3-5: How Salespeople Spend Their Time
Service
Calls
Selling
Face-to-Face
Administrative
Tasks
Selling over
the phone
Waiting and
Travel

54. The “Travelling salesperson” problem
On average , 17% of the salespeople time is spent travelling and waiting.
Techniques used to schedule and route salespeople, the issue has become known as ‘travelling salesperson problem’, the dilemma is stated as a search for a route through the region that allows a salesperson to visit each customer and return to the starting point with minimum expenditure of their time or money

55. The “Travelling salesperson” problem
To plan a travel route based on four basic rules:
The route should be circular
The route should never cross itself
The same route shouldn’t be used to travel to and from a customer
Customers in neighboring areas should be visited in sequence.

56. Overall Time Management
A key aspect of managing time effectively is to recognize and control things that used to waste time such as:
Telephone interruption
Drop-in visitors
Lack of self discipline
Crises
Meetings
Lack of objectives , priorities and deadlines

57. Overall Time Management
7. Indecision and procrastination
8. Attempting too much at once
9. Leaving tasks unfinished
10. Unclear communication
Note : It’s important in time management to know when the customer is available.
* In time management we used a framework which based on two criteria

58. Overall Time Management
Importance : refers to the activities that are importance to you in meeting your objectives.
Urgency : is the time pressure we feel to perform certain activities .

59. Importance Emergencies Time Wasters Personal Growth Recreation
High Low
Emergencies
Time
Wasters
High
Urgency
Personal
Growth
Recreation
Low
Figure 3-6: Time Management