Transcript Chapter 3

Part II
SALES FORCE ACTIVITIES
Chapter 3:
Sales Opportunity
Management
Sales Opportunity Management
Generating
New
Accounts
Managing
Existing
Accounts
Sales
Versus
Profits
Personal
Time
Management
What Creates
Satisfied Customers?
Mergers and
Acquisitions
10%
Introducing
New Products
42%
15%
Acquiring
New Customers
42%
Increasing
Business with
Existing Customers
Figure 3-1: What’s the Best Way to Grow?
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?
Can We Compete?
1
Customer’s Application or Project
6
Formal Decision Criteria
2
Customer’s Business Profile
7
Solution Fit
3
Customer’s Financial Condition
8
Sales Resource Requirements
4
Access to Funds
9
Current Relationship
5
Compelling Event
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
Table 3-1
Computing the Cost per Call for an Industrial Products Salesperson
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
How Dell Achieves Selling Efficiencies
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
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
Customer Break-Even Analysis
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
Table 3-3: ABC Account Classification
Account
Classification
A
B
2,000
C
462
Totals
(Avg)
No. of Total Sales
Accts. Accts. (000)
(1)
(2)
(3)
21
28
15%
20
91
65
140
$910
280
210
Total
Sales
(4)
Total calls
Per Classif.
(5)
Sales ($)
Per Call
(6)
65%
20
105
140
$8,667
15
455
100% $1,400 100%
700
$2,000
Table 3-2
Selected Statistics on Cost per Call and
Number of Calls Needed to Close a Sale
Cost
per Call
Number of
Calls Needed
to Close a Sale
Sales Costs as a
Percentage of
Total Sales
$ 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
25.00
3.7
2.4
Printing/Publishing
70.10
4.5
22.2
248.20
4.7
3.6
Industry
Business Services
Rubber/Plastic
Figure 3-2: PortfolioModel
Competitive Position
Weak
Strong
High
Low
Core
Accounts
Growth
Accounts
Accounts are very
Accounts are potentially
attractive.
attractive.
Invest heavily in selling
May want to invest
resources.
in heavily
Drag
Accounts
Problem
Accounts
Accounts are moderately
attractive.
Invest enough to maintain
current position.
Accounts are very
unattractive.
Minimal investment
of selling resources.
$20,000
$10,000
1
2
3
4
5
6
Number of Sales Calls Per Quarter
Figure 3-3: Number of Sales Calls Response Function
Unqualified
13
24
19
20
21
15
17
23
16
22
12
9
14
18
11
10
50% closure
probability
Qualified
7
75% closure
probability
5
6
8
3
Best few
1
4
2
Figure 3-4: The Sales Funnel
90% closure
probability
Figure 3-5: How Salespeople Spend Their Time
Service
Calls
Administrative
Tasks
13%
16%
17%
Waiting and
Travel
Selling
Face-to-Face
29%
25%
Selling over
the phone
High
Importance
High Emergencies
Low Personal
Growth
Low
Time
Wasters
Recreation
Figure 3-6: Time Management
When Systematic Biases
Are Likely to Exist
Source of Bias Salespeople 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.
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.
Company
When Systematic Biases
Are Likely to Exist (cont.)
Source of Bias Salespeople Who…
Sales
Manager
Salesperson
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
 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
Percent
of Sales
Percent
of Account
Sales per
Account
40.5%
9%
56,250
15.2
9
5,625
10
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
110
Accounts
$370,000
Call Pattern
100.0%
Total Number
of Calls
99%
Percent
Of Calls
$15,000
$ 3,364
Sales
Per Call
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
About every 2 mos.
110
12.5
340.91
Next 20
About every 2 mos.
110
12.5
336.36
Next 20
Once a quarter
80
9.1
234.38
Last 20
Once a quarter
80
9.1
187.50
880
100.0%
$576.92
$420.45