Strategy and Sales Program Planning doc

Figure 2-3: Hierarchy of Sales ObjectivesCorporate goals Maximize shareholder wealth Corporate goals Maximize shareholder wealth Business unit objectives 12% revenue growth Grow pre-tax

The natural progression

How to make sales force and sales program decision

Business Strategy

Business Strategy Marketing Marketing Strategy Strategy

Go-to-Market Strategy

Supply Chain Management (SCM)

Customer Relationship Management (CRM )

Strategy

Business Strategy

Figure 2-2 : Factors Influencing Strategic Management

Demographics Economic Conditions Technology

Competitive conditions Sociocultural factors

Environmental constraints Legal & regulatory

Demographics Economic Conditions Technology

Competitive conditions Sociocultural factors

Resources Financial R&D Personnel Brand Equity Production

Firm’s historymanagement cultureFirm’s history

management culture

Marketing Strategy

Figure 2-3: Hierarchy of Sales Objectives

Corporate goals Maximize shareholder wealth

Corporate goals Maximize shareholder wealth

Business unit objectives 12% revenue growth Grow pre-tax profits by 18%

Business unit objectives 12% revenue growth Grow pre-tax profits by 18%

Marketing objectives Increase product A’s market share by 2 points Grow contributions after sales & marketing by 20%

Marketing objectives Increase product A’s market share by 2 points Grow contributions after sales & marketing by 20%

Sales department objectives Achieve sales revenue of $210 million Grow contributions after sales expenses by 25%

Sales department objectives Achieve sales revenue of $210 million Grow contributions after sales expenses by 25%

Sales district objective Achieve sales revenue of $10.5 million in product A Obtain $7 million contributions after direct selling

Sales district objective Achieve sales revenue of $10.5 million in product A Obtain $7 million contributions after direct selling

Salesperson objective Achieve sales revenues of $1.2 million in product A Obtain $0.8 million in gross margin dollars

Salesperson objective Achieve sales revenues of $1.2 million in product A Obtain $0.8 million in gross margin dollars

Major account objective Achieve sales revenues of $95,000 in product A Obtain an average gross margin of 80%

Major account objective Achieve sales revenues of $95,000 in product A Obtain an average gross margin of 80%

A Look into What

Companies Want

of company product

Increasing sales/

revenue

Investor relations Saving costs Other

What Goals are Most Important to You?

of company product

Increasing sales/

revenue

Investor relations Saving costs Other

How Successful Were You at Reaching Your Goals?

Types of Strategies (Generic) and Their Effect on Sales

Programs

Low Cost Strategy:

Vigorous pursuit of cost reductions from

experience and tight cost control

High Profit Sales Programs:

 Extensive use of independent sales agents

 Focused on transactional customer relationships

 Structured so that managers supervised a large number of salespeople

 Compensation was largely incentive based

 Salespeople were evaluated primarily on their sales outcome performance

Differentiation strategy:

Creating an offering perceived as being

unique leading to high brand loyalty and

low price sensitivity.

High Profit Sales Programs:

 Selective use of independent sales agents

 Focused on long-term customer relationships

 Structured so that managers intensely supervised a limited number of salespeople

 Compensation was largely salary based

 Salespeople were evaluated on their behaviors

as well as their outcomes

Niche Strategy:

Servicing a target market very well,

focusing all decisions with the target

market needs in mind, dominating sales

with the segment.

High Profit Sales Programs:

Experts in the operations and opportunities associated with a target market Otherwise the firm adopted the program characteristics

associated with the appropriate value creation strategy above

Figure 2-4: Business Strategies and High Profit Sales Force Programs

Build Strategy Expand market share in a high- growth market

Harvest

Divest

Secure Added Distribution

Add new customers

Provide high presale services

Provide product

& market feedback

Focus on volume growth

Build current relationships

Call on targeted current customers

Increase service

to current customers Call on targeted new customers

Focus on account penetration

Call on most profitable accounts only Reduce overall service levels

Reduce inventory levels Maintain distribution

Invest as little time as necessary

Harvest Strategy Reduce costs and focus on profit, not market share

Divest Strategy Reduce

inventory

at lowest cost possible

Eliminate services

Offer exceptional pricing Focus on one time sales

Minimize time commitment

Figure 2-4: Business Portfolio Analysis and Sales Force Strategy

Sales Force Ranking and Sales Growth: Pharmaceuticals (1988-1990)

Sales Force Ranking and Sales Growth: Computers (1988-1990)

A More Detailed Look at Marketing Strategy

 The Three Major Functions of

Marketing:

– Segmentation

– Targeting

– Positioning

Strategic Implementation Decisions

1 What is the best way to segment the market?

2 What are the essential activities required by

each segment?

3 What group of go-to-market participants

should perform the essential activities?

4 Which face-to-face selling participants should

be used?

Steps in Developing a Go-to-Market Strategy

Figure 2-6 Essential Activities

Interest Creation

Purchase

Pre-Purchase Post-Purchase

Account Maintenance:

Continue high-quality service Electronic Data Entry (EDI) Prompt delivery

Enhance value proposition Relationships

Efficiency Selling:

Take orders Secure distribution Consider self-ordering (lower price)

High Information, High Solution Needs

Agents Distributors Retailers Integrators Alliances

Advertising Promotion Direct Mail

Advertising Promotion Direct Mail

marketing

marketing Internet

Non-Sales Force Options Sales Force Options

Company Customers and Prospects

Figure 2-7 Potential Go-to-Market Participants

Figure 2-8 Comparing Various Go-to-Market Alternatives

AdvertisingDirect Mail

InternetTelemarketing

Sales Force

Effectiveness

Efficiency

High Sales per Exposure Low Cost

per Exposure

Customer Base

Account

Teams Geographic Sales Force

Direct Sales Force

Industry

Go-to-Market Strategy: A Large Computer Manufacturer

Customer Base

Account Teams

Direct Sales Force

Inbound Telemarketing

Go-to-Market Strategy: A Large Chemical Company

Customer Base

Account

Teams

Geographic Sales Force

Direct Sales Force

Inbound

Go-to-Market Strategy: A Pharmaceutical Company

Customer Base

Account

Teams Geographic Sales Force

Direct Sales Force

Outbound Inbound

Go-to-Market Strategy: An Industrial Distributor

Figure 2-9 Product Development Management Subprocesses

Identify customer needs for better solutions

Discovering and designing new product solutions

Developing new solution prototypes

Managing internal departmental priorities and involvement Designing activities to speed-up development process

Launching new and redesigned offerings

Figure 2-10 Supply Chain Management Subprocesses

Selecting and managing supplier relationships Managing inbound logistics

Managing internal logistics Managing outbound logistics Designing product assembly and batch manufacturing Managing process technology

Order, pricing, and terms management Managing channel partners

Managing product installation and maintenance

Figure 2-11 Customer Relationship Management Subprocesses

Identifying high value prospects

Learning about product usage and application

Developing and executing advertising and promotion programs Developing and executing sales programs

Developing and executing customer service programs

Acquiring and leveraging customer contact information systems Managing customer contact teams

Enhancing trust and customer loyalty

Cross-selling and upselling of offerings

• From P&L to balance sheet: Customers viewed as assets

• CRM;s Task: To increase shareholder value by

leveraging the customer base.

• Focus on understanding cash flow effects and risk

• CRM viewed as a tool to achieve a bigger customer share

through cross-selling and up-selling

• Typical in multi-product, multi-divisional environments

• Focus on account planning and organizational alignment

Sales

Driver of Revenue

Three Steps in Leveraging the Customer Base

Figure 2-12 Sales Force Program

Marketing Objectives, Strategy, and Strategy Implementation Program

Marketing Objectives, Strategy, and Strategy Implementation Program

Account Relationship Strategy

Desired Selling Actions and Behaviors

Desired Selling Actions and Behaviors

Organizational Structure

Competency Development Program

Leadership System

Estimates of sales potential and sales forecast

Estimates of sales potential and sales forecast

Estimates of sales force size and budget

Estimates of sales force size and budget

Feedback

Account

Relationship

Strategy

• How long is the selling cycle?

• How much time is spent on customer need discovery?

• Will the offering be customized for each customer?

• Will other functional areas be involved in the sale?

• How much will we need to invest in the individual customer relationship?

• How easily can the customer switch to a competitor once the relationship is established?

Sales Force

Selling

Activities

• What are their non-selling responsibilities?

• How much customer face-time will salespeople have?

• How will sales leads be generated?

• How much time will be spent with new prospects?

• How will business with existing customers be grown?

• With whom in the customer’s organization will the sales force interact?

• What support will be needed to consummate a sale?

• How will customers be serviced?

Sales Force Program Elements – Cont.

Organizational

Structure

• Will the sales force be specialized by product, customer, or function?

• How many salespeople will be needed?

• What is the span of control for management?

• How many levels of management will be needed?

• How will territories by designed?

• What is the location of salespeople and managers?

• Will telemarketing support be needed?

• Experience level of new salespeople?

• Length and purpose of initial training program?

• Nature of continuing development program?

Competency

Development

Program

Program

• Mix of salary, bonus, and commission compensation?

• Total compensation level?

• What additional incentive programs will be needed?

• What benefits will be needed?

• Use of quotas?

• How much will be spent on sales meetings?

• Behavioral-based evaluation metrics?

• Performance-based evaluation metrics?

• Required sales force information system?

Sales Force Program Elements – Cont.

Relationship

Consultative

Relationship

Different Sales Orientations

Best products with a competitive price

Product excellence and/

Solution Sales

Impact on your business results

“business consultant”

All levels

Valuable solutions to support competitive advantage

Driving customer profits and EVA

Value Sales

Traditional Relationships Enterprise Relationships

 Little recognition of credit for past

performance  Recognition of past performance and track record

 No responsibility for supplier’s profit

margins  Recognition of suppliers’ need to make a fair profit

 Little support for feedback from

suppliers  Feedback from suppliers encouraged

 No guarantee of business

relationship beyond the contract  Expectations of business relationship beyond the contract

 No Performance expectations

beyond the contract  Considerable performance expectations beyond the contract

 Adversarial, zero-sum game  Cooperative and trusting,

positive-sum game

Figure 2-14: Changes in Customer Expectations of Suppliers

Good 27%

Fair 10%

Poor 53%

Very Good 10%

Partnering Effectiveness Index