Strategy and Sales Program Planning doc

Part I THE BIG PICTURE Chapter 2: Strategy and Sales Program Planning The natural progression How to make sales force and sales program decision LEVEL Top Management Decisions LEVEL Strategy Implementation Decisions LEVEL Sales Force Program Decisions Business Business Strategy Strategy Marketing Marketing Strategy Strategy Go-to-Market Strategy Customer Relationship Management (CRM) Product Development Supply Chain Management Management (SCM) (PDM) Ac Str es viti ti Com pe t uct ure Account Relationship Strategy en c ie s Figure 2-1 The Sales Force Decision Sequence Le a ip rsh de Business Strategy Environmental constraints Environmental constraints Legal & regulatory Legal & regulatory Demographics Demographics Economic Conditions Economic Conditions Technology Technology Competitive conditions Competitive conditions Sociocultural factors Sociocultural factors Distinct competencies Distinct competencies Marketing Marketing Financial Financial Technology Technology Information Information Strategic Management Strategic Management Planning Planning Resources Resources Financial Financial R&D R&D Personnel Personnel Brand Equity Brand Equity Production Production Firm’s history Firm’s history management culture management culture Figure 2-2: Factors Influencing Strategic Management Marketing Strategy Corporate goals Corporate goals Maximize shareholder wealth Maximize shareholder wealth Business unit objectives Business unit objectives 12% revenue growth 12% revenue growth Grow pre-tax profits by 18% Grow pre-tax profits by 18% Marketing objectives Marketing objectives Increase product A’s market share by 22points Increase product A’s market share by points Grow contributions after sales & marketing by 20% Grow contributions after sales & marketing by 20% Sales department objectives Sales department objectives Achieve sales revenue of $210 million Achieve sales revenue of $210 million Grow contributions after sales expenses by 25% Grow contributions after sales expenses by 25% Sales district objective Sales district objective Achieve sales revenue of $10.5 million in product A Achieve sales revenue of $10.5 million in product A Obtain $7 million contributions after direct selling Obtain $7 million contributions after direct selling Salesperson objective Salesperson objective Achieve sales revenues of $1.2 million in product A Achieve sales revenues of $1.2 million in product A Obtain $0.8 million in gross margin dollars Obtain $0.8 million in gross margin dollars Major account objective Major account objective Achieve sales revenues of $95,000 in product A Achieve sales revenues of $95,000 in product A Obtain an average gross margin of 80% Obtain an average gross margin of 80% Figure 2-3: Hierarchy of Sales Objectives A Look into What Companies Want What Goals are Most Important to You? 70 66.1% 60 50 40 30 29.8% 31.9% 20 14.0% 7.7% 10 Building Brand of Company/ product Enhancing Increasing credibility sales/ of company revenue product Investor relations Saving costs 7.8% Other How Successful Were You at Reaching Your Goals? 100 94% 93% 83% 80 72% 68% 58% 60 42% 40 32% 28% 20 17% 6% Building Enhancing Increasing Brand of credibility sales/ Company/ of company revenue product product Investor relations 7% Saving costs Other Go-to-Market Strategy: A Large Chemical Company Direct Sales Force Account Teams Telemarketing Inbound Customer Base Customer Base Go-to-Market Strategy: A Pharmaceutical Company Direct Sales Force Account Teams Geographic Sales Force Telemarketing Inbound Customer Base Customer Base Partners Go-to-Market Strategy: An Industrial Distributor Direct Sales Force Telemarketing Inbound Account Teams Outbound Geographic Sales Force Customer Base Customer Base Internet 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 Three Steps in Leveraging the Customer Base Shareholder Value Driver of Cash Flow & EVA Business Driver of Profits Sales Driver of Revenue • 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 management • CRM integrated in the business process and yearly planning process • Improving the profitability of customers seen as a driver of business profit • Focus on customer selection • 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 Figure 2-12 Sales Force Program Marketing Objectives, Strategy, and Marketing Objectives, Strategy, and Strategy Implementation Program Strategy Implementation Program Estimates of sales Estimates of sales potential and potential and sales forecast sales forecast Account Relationship Strategy Account Relationship Strategy Desired Selling Actions Desired Selling Actions and Behaviors and Behaviors Estimates of sales force Estimates of sales force size and budget size and budget Organizational Structure Organizational Structure Competency Development Program Competency Development Program Leadership System Leadership System Feedback Sales Force Program Elements – Cont • 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? • What are their non-selling responsibilities? Sales Force • How much customer face-time will salespeople have? Selling • How will sales leads be generated? Activities • 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 • Will the sales force be specialized by product, Organizational customer, or function? Structure • 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? Competency • Experience level of new salespeople? Development • Length and purpose of initial training program? Program • Nature of continuing development program? Sales Force Program Elements – Cont Leadership 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? e ris ip p ter onsh En ati l Re Investment by Supplier e tiv ip lta su onsh n Co elati R l na tio p ac nshi s an tio Tr ela R Investment by Customer Figure 2-13: Alternative Types of Account Relationships Different Sales Orientations Product Sales Solution Sales Best products Solutions to your needs Impact on your business results Profile of Sales “Product Expert” “Solution provider” “business consultant” Customer Contacts Narrow Space (e.g., purchasing) Function/ department All levels Offering Best products with a competitive price Product and service solutions to customer needs Valuable solutions to support competitive advantage Success Factors Product excellence and/ or cost leadership Understanding the customer’s needs Driving customer profits and EVA Sales Argument Value Sales Figure 2-14: Changes in Customer Expectations of Suppliers Partnering Effectiveness Index ... Strategy, and Marketing Objectives, Strategy, and Strategy Implementation Program Strategy Implementation Program Estimates of sales Estimates of sales potential and potential and sales forecast sales. .. 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... How to make sales force and sales program decision LEVEL Top Management Decisions LEVEL Strategy Implementation Decisions LEVEL Sales Force Program Decisions Business Business Strategy Strategy