Part II

SALES FORCE
ACTIVITIES

Chapter 3:
Sales Opportunity in
Management
Sales Opportunity Management

Generating Managing Sales Personal

New Existing Versus Time
Accounts Accounts Profits Management
Generating New
Accounts
What Creates
Satisfied Customers?
Mergers and
Acquisitions

10%
42% Acquiring
Introducing New Customers
15%
New Products

42%

Increasing
Business with
Existing Customers
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?
Customer’s Application or
1
Project
2 Customer’s Business Profile
Customer’s Financial
3
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?

Customer’s Application or 6 Formal Decision Criteria
1
Project
2 Customer’s Business Profile 7 Solution Fit
Customer’s Financial
3 8 Sales Resource Requirements
Condition
4 Access to Funds 9 Current Relationship
5 Compelling Event 10 Unique Business Value

Can We Win? 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

Managing Existing
Accounts

Is the account too small?

 Computing the Cost per Call for an Industrial Products
Table 3-1
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 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) $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 Sales Costs as
a
Number of
Cost Calls Needed Percentage of
Industry per Call to Close a Sale 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/Publishin
g 70.10 4.5 22.2
Rubber/Plastic 248.20 4.7 3.6
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
Now what?

Setting Priorities?
Methods for Setting
Account Priorities

 Single-Factor Model
 Portfolio Models
 Decision Models
 Sales Process Models
 ABC Account
Classification (Single
Factor Model)
# of Total Total
Account Account Account Sales Total Calls per Sales
Classif. s s (000) Sales Classif. ($) per
(1) (2) (3) (4) (5) Call (6)

$866
A 21 15% $910 65% 105
7
$200
B 28 20% $280 20% 140
0
C 91 65% $210 15% 455 $462
$200
Totals 140 100% $1400 100% 700 0
(Avg.)
 Portfolio Model
Competitive Position

Strong Weak
Growth
Core Accounts
 Accounts are Very
Accounts
High Attractive Accounts are
 Invest Heavily in Potentially Attractive
Account Selling Resources May Want to Invest
Heavily
Opportunit Problem
y
Drag Accounts
 Accounts are Accounts
Low moderately Attractive Accounts are Very
 Invest to maintain Unattractive
current competitive Minimal Investment of
 Customer Break-Even
Analysis
(Decision Models)
Average Sales Volume Per Month
$9,784

$8,153

$6,522 C
$4,891

$3,261
A
$1,630
B
1 2 3 4 5 6
Number of Sales
Calls Per Month
How Dell Achieves Selling
Efficiencies
(Example of Sales Process Model)
Traditional Model Internet Model
100,000 100,000
Catalog Drops Website Visits

5,000
10,000
Calls
Calls

2,000 500 1,750

Orders E-Orders Orders
Big Difference?
When Systematic Biases
Are Likely to Exist
Source of Salespeople Who… Are More Likely To
Bias
Customer Have low-sales Spend too much time with
potential, demanding them.
customers
Have customers with Focus on customers whose
high service needs or needs they can easily meet on
needs that the their own.
salesperson can’t meet
on his or her own
Company Have territories with too Have low penetration or share
many high-sales as a result of poor coverage.
potential accounts

Have little information Spend their effort where the

about the potential of current sales are highest.
different accounts

Have very little cash Expend too little energy

compensation at risk in customizing sales actions for
the incentive plan individual customers.
When Systematic Biases
Are Likely to Exist (cont.)

Source of Salespeople Who… Are More Likely To

Bias Are managed by the Spend too much time with
Sales
number of calls they friendly customers
Manager make irrespective of potential.
Are left alone to decide Have high variability in the
what to do quality of precision selling

Salesperson Have difficulty handling Shy away from difficult

rejection and customer accounts.
objections

Are making good Seek the high-probability, low

progress toward making volume account.
quota
Have made quota Seek the low-probability, high
relatively early in the volume account.
period
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:
Time Allocation: Customer Sales

Strength Footwear, Inc.

Sales Last
 Develop and
Accounts Year justify a call
Top 10 $150,000 schedule for
allocating
Next 10 best 56,250 time across
Next 10 best 55,500 the 110
customers in
Next 20 best 37,500 your territory.
Next 20 best 37,500
 What
Next 20 best 18,750 additional
Last 20 15,000 information
should you
$370,000
consider in
allocating
your time?
Time Allocation Analysis
Number of Total Sales Percent Percent Sales per
Accounts Volume of Sales of Account 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

Total Number Percent Sales

Accounts Call Pattern of Calls Of Calls Per 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 2 110 12.5 340.91
mos.
Next 20 About every 2 110 12.5 336.36
mos.
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

Importance
High Low

H
Emergencies Time Wasters
igh
Urgenc
y
Personal
Low Recreation
Growth