Improving sales management of personal homecare business unit of connell brothers company

Co mparing to multinational distributors like CBC, local trader has - Internal condition: • Unstable salesforce and sales leader: after resignation of business unit manager BUM, sales t

UNIVERSITY OF International School of Business

-

PHAM NGOC ANH THU

IMPROVING SALES MANAGEMENT

OF PERSONAL & HOMECARE

BUSINESS UNIT OF CONNELL

BROTHERS COMPANY

ID: 22140048

MASTER OF BUSINESS ADMINISTRATOR

SUPERVISOR: Phd TRAN HA MINH QUAN

Ho Chi Minh City – Year 2016

Table of Contents

Introduction 1

Situation analysis 5

Problem identification 7

Causes and effects tree 9

Problem definition 11

Problem existences 11

Causes of the central problem 12

Alternative Solution 26

Conclusion 37

Appendix 1:Questions and transcript of interview section 1 37

Appendix 2 :Questions and transcript of interview section 2 38

Appendix 3: Questions of interview section 3 39

Appendix 4: Sales process 40

Appendix 5: KPI Evaluation form 42

Appendix 5-1: KPI Evaluation form 43

Appendix 6: Job description of Business Manager of Brenntag Company 45

Appendix 7: Questions and answers of customers about Sales manager’s……… 47

Appendix 8: Questions and answer of suppliers 48

References 49

This research will identify causes and outline the reason why sales result decreased in the first half of year 2016 Then, we can suggest appropriate solution to improve PnHC business

Connell Brothers is originally founded its first office in Vietnam before 1975 Due to the U.S trade embargo i mposed in 1975, the co mpany was co mpelled to postpone its operations in Vietnam When the embargo was lifted in 1993, Connell Brothers was one of

Today, Connell Brothers Vietnam is fully licensed to operate as a full service distributor with two offices in Ho Chi Minh and Hanoi

Connell Brothers Vietnam is one of the leading specialty chemical and ingredients distributors in the country by representing leading global suppliers and serving customer needs for raw material in a wide variety of industrial and regulated industries With concepts

of being the best technical consultants and guiding marketing trend in business development, Connell Brothers Vietnam is a trusted partner of both suppliers and customers Personal & Homecare depart ment (PnHC) which is the fourth business unit of Connell Bros has played an i mportant role in the development of co mpany Not only succeeding in supplying chemical for multinational companies, but also succeeding in supplying chemical for local co mpanies, P&HC is one of leading co mpanies contributing into the success of Vietnam brand like X-men shampoo, Enchentuer, Ro mano, My Hao, Net, Lix, Lavox, Kanac, etc By flexible strategies, Connell Brothers has changed business policies to adapt customer requirement and market needs Changing fro m representative office to limited

co mpany, Connell Brothers Co mpany (CBC) has expanded ability of supplying for varied customers with its own warehouse, effective supply chain system and flexible pay ment term Industry development has created not only opportunities but also threats for multinational chemical distributors like CBC CBC has met high co mpetition with both multinational co mpanies and local co mpanies CBC has not been a monopoly co mpany in

many distributors that they feel satisfied Consequently, the problem is that CBC should

homecare chemical market

Personal & Homecare business

Overview of personal & homecare market

Market is dominated by multinational co mpanies like P&G, Unilever, Kao, Rohto due

to the satisfaction with foreign brands and attractive advertisement of most Vietnamese customers Meanwhile, local co mpanies follow marketing trend that multinational players created due to their shortage of advertising budget They have built effective distribution channel all over countries, especially in the west or remote places where multinational

co mpanies skipped by high distribution investment However, west places are potential

shows increasing significant market share number of personal and homecare It proves this is

a potential market that local co mpanies should invest more

Table 1: Personal care market share (Euromonitor international 2015)

Products 2011 2012 2013 2014 Aircare 361 402 439 467

Personal & homecare of CBC:

P&HC is the fourth position in Connell Brothers Company Its sales revenue increases 15% annually by developing new suppliers, new customers and new products PnHC divides customers into two seg mentation as personal care and salon & homecare For personal care seg ment, it supplies chemical for bath shower, shampoo skincare, cos metics, etc For salon & homecare segment, it supplies chemical for haircare salon channel and households With its customer division, sales team can well focus on their

US after dividing into two seg ments for 4 years

Figure 1: Sales revenue in 2015

distributors have founded to meet market needs Chemical supply source is not monopoly by some foreign distributors like CBC Customers can buy fro m local distributors with longer payment term, or i mport directly fro m suppliers having or not having representative in Vietnam Consequently, CBC has difficulties not only with co mpetitors but also suppliers that they are working with to sustain stably

Sales force is very costly and effective in achieving certain marketing objectives The purpose of the sales force is to produce sales revenue and this involves the art of personal selling Hence, sales process management must give careful thought to designing and managing its personal-selling resources effectively and long term Sales process management include in recruitment, training program, salesforce supervision, evaluation, resource back-up plan, suppliers management, etc Moreover, Connell Brothers is a B2B model in chemical industry business so the role of sales manager in leading sales force how to promote new products is very i mportant Besides that, motivation and incentives policy are also two elements affecting sales performance Frederick Herxberg1 said that the best way to motivate someone is to organize the job so that provides feedback and challenge that satisfy the person’s “ higher level” needs for things like accomplishment and recognition- means doing the job intrinsically motivating Sales management, motivation, incentives are necessary factors for sustainable developing of sales force, especially sales spirit

Go through business review of the first half year and sales performance, I su mmarized current symptoms as following:

Symptoms

Sales of the first half year 2016 drops 12% co mpared to year 2015 while sales

normally increases fro m 2011 to 2015

Personal and homecare usually achieve co mpany’s budget higher 10% each year However, sales result decreased in the first half o f year The reason co mes fro m internal and external condition:

- External condition:

• Market demand drop: market dropped demand due to economy difficulties, disasters affecting beauty needs

invest and develop their products co mpeting with popular supplier by co mpetitive price strategy Consequently, current suppliers have to work with customers directly to maintain their business instead of selling through distributors like Connell Brothers co mpany Moreover, many local chemical traders open business in personal and homecare seg ment due

to potential business Co mparing to multinational distributors like CBC, local trader has

- Internal condition:

• Unstable salesforce and sales leader: after resignation of business unit manager (BUM), sales team still grow business 35% versus budget by the effort of high experience and long serving sales team Ms Loan has been working with CBC for 7 years and brought ½ profit for business depart ment She managed sales team temporarily and achieved result higher than budget However, co mpany didn’t promote her to BUM position officially because she doesn’t have leadership experience New Human resource manager who hasn’t had experience in chemical industry changed job specification of a BUM by recruiting new sales leader without chemical background and chemical industry market experience to lead a strong team as PnHC As PnHC is a strong team with high experience sales team, co mpany recruited a person who have leadership skill to support them forward, but don’t need to well understand to guide sales team; especially new BUM isn’t necessary to learn chemical knowledge, market orientation in 2 years Sales team have to do more reports for both BUM, co mpany and suppliers When they have issues, manager cannot give the effective solution fast When sales team face difficulties in dealing price, pressures on developing unworkable products fro m suppliers, BUM cannot help them while sales team

dynamic to develop new products

and homecare industry is that manufacturers focus on researching new products or developing current products in quarter 1, 2; and process to order chemicals to produce in quarter 3 and 4 Hence, salespeople have to work with customers closely to follow up new projects in the racing with many co mpetitors to achieve new business development target in quarter 1 and 2 However, sales team doesn’t create a significant number of projects as prior year because they are not dynamic to research, consult and follow up customers well The number of project pipeline declines in the first half year while it should have been increased

to get sales in the 4th quarter Lab service team also don’t have projects because sales team don’t bring many projects for them to work

Problem identification

The method of this project is interviewing sales team & laboratory team o f Personal care depart ment, salesperson & sales manager of food depart ment for co mparison, sales manager of co mpetitors as following:

Purpose of interviewing

1 Pham Mai Vy Technical Sales Executive Personal & Homecare - To discuss with

sales team about their job and their expectation to identify problem

2 Nguyen Thi Minh Tram Technical Sales Executive Personal & Homecare

3 Vo Thi Kim Loan Technical Seg ment Manager Personal & Homecare

4 Dang Thi Tram Oanh Lab service Executive Personal & Homecare

- To discuss about working process with sales team to

Table 3: The list of interviewees

Interview is divided into 3 sections to discuss and identify real problem:

- Section 1: interview sales team & lab team o f personal & homecare business unit to identify problems

- Section 2:interview sales team to discuss deeply about key problems identified in section 1

- Section 3: discuss with co mpetitors and any member of other department about problems to check if their co mpanies also have the same situation

Interview questions and transcripts are shown in Appendix 1 to show discussion with interviewees

According to the result of interview in section 1, the key problem o f sales team is work overload Sales team told that they have to do not only to achieve sales target but also

do so much paperwork like price negotiation, purchasing, delivery, controlling inventory following debt and reports to business unit manager, regional manager, suppliers They have

to work to finish requirement in KPI such as i mplementing forecast well, achieve business

5 Nguyen Chinh Thanh Senior Sales Executive Food

- To discuss about his job, expectation, his sales leader

6 Hoang To Nga Business Unit Manager Construction

- To discuss about her job, point of view

7 Lam Hue Linh Sales Executive

Personal & Homecare/ Brenntag

- To discuss about sales process, policy of co mpetitor

Salespeople have to do paperwork a lot, so they do not have time to read documents, research

to find new marketing concept, new products to introduce customers Long serving salespeople handle key accounts, and they feel stressed due to co mplicated working process

of co mpany while sales manager cannot help them solve difficulties They told that co mpany offer incentives lower than co mpetitors’ in the market such as Brenntag, DKSH while they must do harder It seems that co mpany doesn’t motivate their contribution even long serving time at CBC Hence, they want to find better job that don’t make them stressed After identifying problems in section 1, continue to interview in section 2 to discuss with sales people about work overload and criticize causes of problem

Causes and effects tree

According to the result of interviewing in section 2, I form an initial cause and effect diagram as following to criticize causes of problems

Fro m the cause and effect diagram, we can see low sales performance issue co mes fro m working overload problem o f sales team Problem co mes fro m 2 main aspects: internal condition and external condition

Internal condition Work overload of sale team

Low sales performance Low salesperson

control

Lac k of behavior -based

control

High com petition

Many local distributors

Com plicated sales process

Strict sales policy

Conflict between sales team and BUM Sales drop 12%

BUM is lac k of sales

Problem definition

Fatima Salam 4 defined work overload as “ psychological stressor which is peril to an employee when an employee has ample of task to do and has too little time (Claessens et al 2004) frequently attributed as one of the job stressor (Robinson & Griffiths2005)” Expressed in

a simple way, work overload is situation that employee has too much work to do with too little time but higher target than they require Luanne Kelchner10 stated signs of work over load such

as lower productivity, work quality decrease, absenteeism and tardiness, negativity and health problems The attitude of overloaded workers changes that includes a lack of motivation, emotional outbursts, negativity, irritability, and a change in work habits

Problem existences

The purpose of interviewing in section 2 is confirming the existence of central problem work overload by discussing deeply with 3 members of sales team (Ms Loan, Ms Tram and Ms Vy) about work overload that make low performance The list of interview questions based on measurement of sale developed by Thomas (1981) and result from section 1 are following:

1 Does your job needs to do so much paper work? Can you skip paper process to do faster?

2 Can you share work with other persons in your team or supply chain?

3 Do you often have to work over time? How often do you work over time?

4 When do you feel stressed? Does your manager help you to release workload?

5 Do all sales person have the same over workload?

6 Do you think your job used to be interesting than now? Do you think that salespeople

of other company have to work hard like you?

The interview questions and answer transcript are explained detailed in Appendix 2

Causes of the central problem

Basing on problem definition and interview result, all salesperson confirm 2 causes of work overload are internal and external condition

 Internal condition:

1 Sales management:

Connell Brothers is a distributor company who brings innovation, solution, marketing concept to customers Consequently, sales management process is an important point deciding business success Sales management includes in training sales force, supervising sales force, team meeting schedule, supplier management and key account management

Training sales force: The purpose of training is to improve the overall competence of

sales team by modifying soft skills, widening knowledge about company or major in order to make them satisfied with job to increase working efficiency

John F.Tanner 9 stated that organizations utilize sales training because they see a number

of benefits from this investment: their salespeople are more knowledgeable about their firm’s products and services, the markets than salespeople who haven’t been trained Chris Noonan 2 also concluded “ if skills are to be increased, performance improved, and individuals to adapt changing market conditions and work environments” With good training, a salesperson is more likely to maximize her performance, earn more money, and have greater career mobility Especially, new salespersons must be trained correctly about company orientation, products and sales process to catch up work conveniently

P&HC does not have introduction presentation about business unit situation, suppliers, products, lab achievements, etc Thus, new comers meet difficulties in making familiar with job, sometimes they feel stressed and confused because of high volume workload New comers

normally take three to four months to be familiar with working because of complicated process and high volume workload However, work still continue smoothly because old salesperson handover key accounts and new sales person have time to learn by themselves

Supervising sales force:

Sales force has three key resources to manage: time, company, himself or hersel f An efficient salesperson recognizes the importance of good time management not only to achieve his organizational unit but also to finish other company requirement The sales manager should get presentation of how time is normally used from salesperson to create awareness of where time is going during working day and help him focus on more productive use of time to achieve sales target For new sales person, manager should supervise to perform new tasks by observing and then offering suggestions for improving their performance if needed Chris Noonan 2 showed that a good salesperson should have good plan about following works so that sales manager can well manage and help him succeed:

- Prospecting for new customers

- Sales presentation strategies

- Preparing sales aids

- Post-call evaluation and future planning

Moreover, communication between salesperson and customers or office should be also managed logically by arranging customer appointment, customer visit plan, implement official works such ad debt following, sales contract, order following, etc However, BUM doesn’t manage sales team by weekly meeting, sales plan even though

he is a new sales manager Conversely, he requests sales team to send report for him before meeting 1 or 2 days so that he can submit to higher level He doesn’t care about what salespeople

do, but salespeople have to solve problem or explain any issues with General Director in each monthly meeting because he doesn’t know what salespeople are doing He doesn’t have good working plan with employees When he wants to know any information, he will request employees to join meeting with him immediately, while salespeople should have working plan in short term or long team, especially B2B The way of disarranged working makes sales team uncom fortable because they have their own schedule

Managing sales force

Managing a sales force involves planning, analysis, and organizing Managing sales force requires the sales manager to be skilled in several areas including: setting objectives, organizing the task necessary to achieve them, motivating the sales force and problem solving Sales manager should also ensure sales force have incentives to do jobs well, when needed, they should take corrective action with management to meet initial objectives Sales meetings are normally organized periodically, often monthly, amongst sales team with common interests or issues to address The purpose of sales meeting are:

- Problem resolution: identify and evaluate alternative options

- Instruction: impart new information data, training, etc

- Motivation: encouragement, improvement ideas, exchange experience and ideas

- Exploration: of new ideas to improve productivity BUM doesn’t request to weekly or monthly meeting to discuss problems, difficulties of sales team so that he can help them solve problem or each team’s member can share their ideas, contribution

Key account management:

Key account management is an important thing in sales management activities because sales manager should focus on key customers who bring main profit to business team Iain A Davis 7 stated that “key Account Management (KAM) is also referred to as Strategic Account Management (SAM) which is a systematic supplier process for managing strategically-important business-to-business relationships.” KAM is also considered to be a development from Relationship Marketing, because it involves collaborative ways of working with key customers rather than traditional transactional practices

Chris Noonan2 stated that “ key account manager must be an efficient and effective communicator both with the customers and internally within the selling organization with a strong ability to influence senior managers” The sales manager should select suitable persons to ful fill the job function and have good relationship with key customers However, sales manager should also divide customers fairly so that each salesperson have opportunity to work with various customers and can develop himself

John F Tanner JR 9 stated that sales managers should understand business relationships to devise strategies and direct their customers to move profitable customers or key accounts in deeper relationship Key account managers should have a deep understanding of the customer's value chain, but they will still need the help of technical experts to analyze it and identify how the company can add value to it

PnHC department doesn’t divide key customer fairly Long serving sales person take over big customers while new sales person take over small customers Hence, sales budget is not fair among sales team and sales person having small budget number will be bored with their work while one having large budget number will be stressed and overload

In general, sales management is not efficient due to lack of full training program, managing sales force and reasonable key account management Hence, newcomers, especially new sales manager is difficult to catch up working if he doesn’t have enough experience with this business model

Supplier relationship management:

Supplier relationship management engage the right partners to create the ownership of the relationship, drive effective communication and align strategic objective However, it is not managed reasonably as following reasons:

- Each salesperson take over 2-3 suppliers depended on their customer needs She will prepare all reports, negotiate price, arrange customer meeting with suppliers, etc without BUM’s involvement

- BUM doesn’t have market experience but he doesn’t want to learn about key points that bring success but try to satisfy suppliers by entertaining and promise because sales team’s responsibility is selling to hit budget

Due to ineffective supplier relationship management, suppliers worried about business when salesperson who mainly communicate resigned because BUM cannot take over well and dropped sales budget

Low salesperson innovativeness:

Annie Chen 1(p147) defined innovativeness as a firm’s tendency to develop new products, business by engaging in, supporting new ideas and demonstrating creativity in its business operations There are three key points relating to new salesperson’s perception of their tendency

to support new ideas, engage in, to attempt to approach and to be creative in selling operation:

- Output-based control: sales manager minimizes the burden of governance by permitting salesperson to determine their method and effort level to achieve firm’s goal

- Behavior- based control: sales manager emphasizes activity control and prefer to focus

on sales behavior to monitor salesperson extensively and give direct feedback on them

- Knowledge-based control: sales manager attempts to evaluate and review salesperson based on their ability to generate knowledge and share with other salespeople

Figure 3: Innovativeness effects

Annie Chen 1(p147) concluded salespeople play an important role in promoting new products Moreover, sales managers should know what control mechanism (i.e., output-based

New product sales performance Output-based

new product, sales performance Furthermore, managers may be able to assist salespeople in performing better by having a strong market orientation

Regarding to theory about the importance of market orientation, we can see that sales manager should have experience on the market to lead sales team in working with suppliers, adapting customer’s requirement and competing with competitors effectively P&HC is a good department with strong sales team; however, when BUM resigned, HR didn’t promote staff to that position but recruit a new one without chemical background and market orientation The new BUM comes from Shell company which supply gas to end consumers (B2C model) while CBC supply innovations, solution, marketing concepts, ingredients to manufactures Hence, new BUM cannot effectively assist both sales team and suppliers in promoting new products Moreover, BUM does not have the overview of competitors, so he cannot work with suppliers confidently and recommend business strategy to has meeting with general director and suppliers He should have worked with some customers managing sales team with an empty head That makes sales person stressed and work overload because BUM cannot help them to work well

According to interview result of section 3 with salespeople of another department and

competitors for comparison about necessity of market experience of sales manager, all of them determine that sales manager should understand market orientation and have chemical background to lead sales team effectively The questions and transcript are explained in

Appendix 3

Regarding to idea of Mr Thanh (T echnical sales executive of Food department), BUM should have chemical background to understand the function of any products to discuss with suppliers and direct sales team to the correct way BUM is the image of not only sales team but also company when dealing or presenting to suppliers, customers because General Director is stand behind to support business team while he is not familiar with local market due to foreigner Hence, any decision or suggestion of BUM is very important for the success of a sales team Although his BUM, Ms Truc doesn’t have chemical background, she started her job from chemical purchaser in Nestle, and technical sales executive in CBC for 5 years before being promoted to BUM position Thus, she has experience about market orientation, chemicals; and the important is that she is a patient person who willing to learn from difficulties so she is confident to coach her team efficiently

According to Ms Nga who is the business manager of construction department, BUM should have market and chemical knowledge enough to lead sales team work effectively in right direction Salesperson is the one brings order to company, and difficulties like new concepts, new development, price negotiation, etc are BUM’s job Salespeople aren’t necessary to worry how to work with suppliers, competitors, strict customers Their tasks are selling, building relationship with customers, learn technical skill, etc…hence, her sales team are interested in jobs, work with high team spirit

To check opinion of salespeople in competitors about requirement of sales manager, I also interview 2 sales executive from Brenntag and MKVN Brenntag is a global market leader company and has changed incentives policy to attract good sales applicants I interviewed Ms Linh (T echnical sales executive) about requirement of sales manager She told that sales leader

should have experience to help sales team solve problem, difficulties so that salespeople focus on their main sales job Referring to job description for business manager position in Brenntag, essential experience of B2B and chemical knowledge are required Job description of business

manager is showed clearly in Appendix 6

To check opinion of customers about working attitude of BUM, I interview some key

accounts Questions and answers are showed in Appendix 7 They told that they are not

impressed about CBC’s BUM because he hasn’t communicated and shown his professional style well, even after his salesman resigned

To check opinion of suppliers about working attitude of BUM, I interviewed some key

suppliers Questions and answers are showed in Appendix 8 They told that BUM hasn’t got

chemical background and market experience, so they worried about their business in Vietnam

2 Other causes:

Complicated sales process: complicated sales process of company makes salespeople

tired and stressed Sales process is complicated and has a lot of paper working that waste time of sales team Sales people also have to work following works from starting ordering goods to selling to customers:

- Working with suppliers to deal price

- Calculate price in price calculation price sheet and ask higher level for approval before sending to customer service team for checking, making contracts

- Follow up order progress to inform customers shipping schedule, issues during shipment and suggest solution in case of having problems such as damaged goods, late shipment notice, wrong documents, claim from customers

- Follow up customer credit and consider to ask Finance for increasing credit limit to keep business; follow up overdue payment

- Take time to ask approval from higher level such as business unit manager, general director, finance controller, supply chain manager to order and sell goods When they are out of office, have meeting, sales people have to find them to sign urgent PO for delivering or purchasing goods while customer service people should have worked these works

- There are many rules from supply chain, finance that take time of sales team while they should focus on selling and developing new products only

Sales process is explained detailed in Appendix 4 To sell any products, salespeople have

to not only work with customers but also do all works from purchasing to delivering and solve problems if goods is damaged while salespeople of others company such as Brenntag, DKSH, etc only focus on selling products

Key salesperson resigned:

After key salesperson of homecare segmentation resigned, sales number dropped sharply while homecare business is 50% of whole business Suppliers are worried about their business with CBC, especially key suppliers like Stepan and Dow While waiting for new salesperson, sales manager cannot handover task well because he doesn’t know market and has relationship with customer Other salesperson cannot handover well because the ex-salesperson was in charge

of many key customers and her job is actually consists of 2 persons’ job Suppliers push sales team and they have tendency to look for new distributor if CBC cannot develop their business as well as the salesperson who left The opinion is collected by

interviewing 2 suppliers Stapan and T akasago in Appendix 8

Strict sales policy:

Sales policy consists of internal rules, procedures to support sales process to ease communication and cooperation with customer efficiently However, CBC has strict sales policy which makes both salesman and clients are bored Some customers prefer to buy from local trader because of flexible terms I interviews salesman and customers to summarize in following table

- They don’t like to buy from CBC because of inflexible rules Delivery policy - Accept to deliver order value

is more than $500US only

- For orders delivered directly

from port to customers,

service is very bad because

They have to convince

than $500US/order and

Price policy Price is very tight, inflexible

compare to local trader

Logistics fee is higher than local trader Price is not competitive versus local trader Some

customers buy because of relationship with

CBC always sell higher price than other trader

salesperson

Supply policy - Cannot sell to small

customer because CBC cannot

repack big drum size to small

pack size

Customer’s demand is lower than pack drum size while CBC cannot repack it, so we lost business

They cannot buy big drum size because of low demand

Complaints policy - Returning damaged goods

process is very complicated

Finance department don’t

want to support for this case

- Customers have to wait for

next order to receive

compensation money instead

of on current damaged order

They have to convince customer to accept CBC rules

CBC’s rule is very strict

We only buy from them for some special ingredient that we cannot replace

Customer loans - Very difficult to give credit

limit and T/T payment for

customers

- Lost customers because

company hold order when

customers are over credit limit

or have overdue payment

even 1 day

They have to fight with finance controller, General director to approve orders It wastes

of time and makes them tired

It seems that CBC don’t want to sell goods