Part ii sales force activities
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Part II SALES FORCE ACTIVITIES. Chapter 3: Sales Opportunity Management. 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. Sales Opportunity Management. Generating New

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Part ii sales force activities

Part IISALES FORCE ACTIVITIES

Chapter 3:

Sales Opportunity Management


Sales opportunity management

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.


Part ii sales force activities

Sales Opportunity Management

Generating

New

Accounts

Managing

Existing

Accounts

Sales

Versus

Profits

Personal

Time

Management


A process for generating new accounts

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.


A process for generating new accounts1

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.


A process for generating new accounts2

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.


What creates satisfied customers

What CreatesSatisfied 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?


Building a prospect profile

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.


Building a prospect profile1

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


Building a prospect list

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.


Building a prospect list1

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.


Building a prospect list2

Building a prospect list

  • There are many methods used to identify the good prospects include direct inquiries, trade shows, Directories, internet and referrals


Building a prospect list3

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 e-mail 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.


Building a prospect list4

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.


Building a prospect list5

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.


Building a prospect list6

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.


Qualifying prospects

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.


Qualifying prospects1

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.


Qualifying prospects2

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.


Qualifying prospects3

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.


Managing existing account

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


When is an account too small

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.


When is an account too small1

When is an account too small?

  • This analysis involves two steps:

  • Calculating a personal cost per sales call

  • Breakeven sales volume.


Cost per call

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.


Table 3 1 computing the cost per call for an industrial products salesperson

Table 3-1Computing the Cost per Call for an Industrial Products Salesperson


Breakeven sales volume

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.


Sales opportunity management key to productivity

Sales Opportunity ManagementKey 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

Table 3-2Selected Statistics on Cost per Call and Number of Calls Needed to Close a Sale


Sales opportunity management selected break even results

Sales Opportunity ManagementSelected Break-Even Results


I can t afford to lose this business

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.


Methods for setting account priorities

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


1 single factor model

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.


Table 3 3 abc account classification

Table 3-3: ABC Account Classification

No. ofTotalSalesTotalTotal callsSales ($)

AccountAccts.Accts.(000)SalesPer Classif.Per Call

Classification (1) (2) (3) (4) (5) (6)

A 21 15% $910 65% 105 $8,667

B 28 20 280 20 140 2,000

C 916521015455462

Totals 140100%$1,400100% 700 $2,000 (Avg)


1 single factor model1

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.


2 portfolio model

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


2 portfolio model1

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.


Part ii sales force activities

Figure 3-2: PortfolioModel

Competitive Position

Weak

Strong

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


2 portfolio model2

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.


2 portfolio model3

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


3 decision models

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


3 decision models1

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.


Part ii sales force activities

$20,000

Dollar Sales per Quarter

$10,000

1 2 3 4 5 6

Number of Sales Calls Per Quarter

Figure 3-3: Number of Sales Calls Response Function


3 decision models2

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.


4 sales process models

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.


4 sales process models1

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


4 sales process models2

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


4 sales process models3

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.


Part ii sales force activities

17

7

8

2

1

3

6

5

21

15

23

22

13

24

11

10

18

9

14

12

4

19

20

16

Unqualified

50% closure probability

Qualified

75% closure probability

90% closure probability

Best few

Figure 3-4: The Sales Funnel


Sales versus profits

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.


Customer lifetime value clv

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 )


Customer lifetime value clv1

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.


Time management

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


Part ii sales force activities

Figure 3-5:How Salespeople Spend Their Time

Service

Calls

Selling

Face-to-Face

Administrative

Tasks

Selling over

the phone

Waiting and

Travel


The travelling salesperson problem

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


The travelling salesperson problem1

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.


Overall time management

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


Overall time management1

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


Overall time management2

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 .


Part ii sales force activities

Importance

High Low

Emergencies

Time

Wasters

High

Urgency

Personal

Growth

Recreation

Low

Figure 3-6: Time Management


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