ch03 - sales opportunity management
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Part IIPart II
SALES FORCE SALES FORCE ACTIVITIESACTIVITIES
Part IIPart II
SALES FORCE SALES FORCE ACTIVITIESACTIVITIES
Chapter 3:Chapter 3:
Sales Opportunity in Sales Opportunity in ManagementManagement
Sales Opportunity Management
GeneratingNew
Accounts
ManagingExistingAccounts
PersonalTime
Management
Sales VersusProfits
Generating New Accounts
What CreatesSatisfied Customers?
AcquiringNew Customers
Mergers andAcquisitions
IntroducingNew Products
IncreasingBusiness withExisting Customers
42%
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?Is There an Opportunity?
11Customer’s Application or Customer’s Application or ProjectProject
22 Customer’s Business ProfileCustomer’s Business Profile
33Customer’s Financial Customer’s Financial ConditionCondition
44 Access to FundsAccess to Funds
55 Compelling EventCompelling Event
Developing a Prospect List
1. Direct Inquiry1. Direct InquiryAdvertisingAdvertising
Direct MailDirect Mail
Trade publicationsTrade publications
Trade showsTrade shows
2. Directories – Thomas 2. Directories – Thomas RegisterRegister
3. Referrals3. Referrals
4. Cold Canvassing4. Cold Canvassing
Qualifying Prospects
1.1. Needs for your products/servicesNeeds for your products/services
2. 2. Authority to make purchaseAuthority to make purchase
3. 3. Credit rating & ability to payCredit rating & ability to pay
4. 4. Rating scale applied to Rating scale applied to
characteristics by each characteristics by each
salespersonsalesperson
Siebel Systems, Inc.:Assessing the Opportunity
Is There an Opportunity?Is There an Opportunity?
1Customer’s Application or Project
2 Customer’s Business Profile
3Customer’s Financial Condition
4 Access to Funds
5 Compelling Event
Can We Compete?Can We Compete?
6 Formal Decision Criteria
7 Solution Fit
8 Sales Resource Requirements
9 Current Relationship
10 Unique Business Value
Can We Win?Can We Win?
11 Inside Support
12 Executive Credibility
13 Cultural Compatibility
14 Informal Decision Criteria
15 Political Alignment
Is it Worth Winning?Is it Worth Winning?
16 Short-Term Revenue
17 Future Revenue
18 Profitability
19 Degree of Risk
20 Strategic Value
Managing Existing Accounts
Is the account too small?Is the account too small?
Table 3-1 Computing the Cost per Call for an Industrial Products Salesperson
CompensationCompensation
Salary, commissions, and bonus $69,035
Fringe benefits (hospital, life insurance, social security) $10,985 $80,020
Direct Selling ExpensesDirect 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 YearCalls Per Year
Total available days 260 days
Less:
Vacation 10 days
Holidays 10 days
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)Average Cost per Call ($105,470/615) $171.50
Sales Opportunity ManagementKey to Productivity
Breakeven Sales VolumeBreakeven 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
IndustryIndustryCost Cost
per Callper Call
Number of Number of Calls Needed Calls Needed
to Close a Sale to Close a Sale
Sales Costs as Sales Costs as aa
Percentage ofPercentage of
Total Sales Total Sales
Business Services $ 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
Rubber/Plastic 248.20 4.7 3.6
Sales Opportunity ManagementSelected Break-Even Results
IndustryIndustry BreakevenBreakeven
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
Now what?
Setting Priorities?Setting Priorities?
Methods for Setting Account Priorities
Single-Factor ModelSingle-Factor Model
Portfolio ModelsPortfolio Models
Decision ModelsDecision Models
Sales Process ModelsSales Process Models
ABC Account Classification (Single Factor Model)
Account Classif.
# of Account
s(1)
Total Account
s(2)
Sales (000)(3)
Total Sales
(4)
Total Calls per Classif.
(5)
Sales ($) per Call (6)
AA 2121 15%15% $910$910 65%65% 105105 $866$86677
BB 2828 20%20% $280$280 20%20% 140140 $200$20000
CC 9191 65%65% $210$210 15%15% 455455 $462$462
TotalsTotals 140140 100%100% $1400$1400 100%100% 700700$200$200
0 0 (Avg.)(Avg.)
Portfolio Model
Competitive PositionCompetitive Position
StrongStrong WeakWeak
Account Account OpportunitOpportunityy
HighHigh
Core AccountsCore Accounts Accounts are Very Accounts are Very
AttractiveAttractive Invest Heavily in Invest Heavily in
Selling ResourcesSelling Resources
Growth Growth AccountsAccounts
Accounts are Accounts are Potentially AttractivePotentially Attractive
May Want to Invest May Want to Invest HeavilyHeavily
LowLow
Drag AccountsDrag Accounts Accounts are Accounts are
moderately Attractivemoderately Attractive Invest to maintain Invest to maintain
current competitive current competitive positionposition
Problem Problem AccountsAccounts
Accounts are Very Accounts are Very UnattractiveUnattractive
Minimal Investment of Minimal Investment of Selling ResourcesSelling Resources
Customer Break-Even Analysis(Decision Models)
A
C
B
1 2 3 4 5 6
$1,630
$3,261
$4,891
$6,522
$8,153
$9,784
Average Sales Volume Per MonthAverage Sales Volume Per Month
Number of SalesNumber of SalesCalls Per MonthCalls Per Month
How Dell Achieves Selling Efficiencies(Example of Sales Process Model)
Traditional ModelTraditional Model Internet ModelInternet Model
100,000Catalog Drops
100,000Catalog Drops
10,000Calls
10,000Calls
2,000Orders
2,000Orders
100,000Website Visits
100,000Website Visits
5,000Calls
5,000Calls
500E-Orders
500E-Orders
1,750Orders
1,750Orders
Big Difference?
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.
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 Bias
Salespeople 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
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 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
Time Allocation: Customer Sales
Strength Footwear, Inc.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 AnalysisNumber of Accounts
Total Sales Volume
Percentof Sales
Percent of Account
Sales per Account
10 $150,000 40.5% 9% $15,000
10 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 $370,000 100.0% 99% $ 3,364
Accounts Call PatternTotal Number
of CallsPercentOf Calls
SalesPer Call
Top 10 Every other week 260 29.6% $576.92
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% $420.45
Time Management
ImportanceImportance
HighHigh LowLow
UrgencUrgencyy
HigHighh
EmergenciesEmergencies Time WastersTime Wasters
LowLow Personal Personal GrowthGrowth RecreationRecreation
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