Poor sales management at r star company

UNIVERSITY OF ECONOMIC HO CHI MINH CITY International School of Business - Vy Lang Truong POOR SALES MANAGEMENT AT R STAR COMPANY MASTER OF BUSINESS ADMINISTRATION Ho Chi Minh City - 2018 UNIVERSITY OF ECONOMIC HO CHI MINH CITY International School of Business - Vy Lang Truong POOR SALES MANAGEMENT AT R STAR COMPANY MASTER OF BUSINESS ADMINISTRATION SUPERVISOR: Dr PHAM PHU QUOC Ho Chi Minh City - 2018 SUPERVISOR’S REPORT ON THE THESIS PROPOSAL SUBMITTED FOR DEGREE OF MASTER of BUSINESS ADMINISTRATION The thesis proposal title POOR SALES MANAGEMENT AT R STAR COMPANY Student Name: Vy Lang Truong Supervisor: Dr Pham Phu Quoc General comments:  Remarks on the student’s attitude: …………………………………………………………………………… ……………………………………………………………………………  Remarks on the assignment’s academic quality: …………………………………………………………………………… …………………………………………………………………………… Overall assessment:  Meet requirement for submitting  Not meet requirement for submitting Other remarks:  Did the student follow the report schedule?  Yes  No  The Turnitin plagiarism percentage: Supervisor’s signature  Other………………………… TABLE OF CONTENT EXECUTIVE SUMMARY PART I – INTRODUCTION Company background Company symptoms PART II – PROBLEM IDENTIFICATION Content of in-depth interviews Theoretical basic Verify the potential problem Cause validation PART III – SOLUTION AND ACTION PLAN Solution Action plan PART V – CONCLUSION APPENDIX REFERENCE Executive summary In any organization, the sales department plays a pivotal role in the success of the business At R Star company sales has decreased for consecutive years that lead to profit of company also decreased Compared to other companies in the same industry like Phuong Nga, Dinh Diem that their sales increased sharply So sales decrease is considered as a symptom that need to investigate to find out what are the main problems After conducting an in-depth-interviewed from some staffs at sales department, chief executive officer and base on literature review, the central problem is found that is poor sales management To find out what are the main causes of central problem, some interviews were conducted and the main cause of poor sales management are poor recruitment, poor training and poor coaching To solve that poor recruitment and poor training problems, company a properly recruitment procedure to hire right salespersons after that company well training to make sure salesperson have enough skills to job well For poor coaching, we will work with sellers one-on-one or in small groups to guide sellers' actions, keep them on track, develop skills, and help sellers achieve top performance Coaches meet regularly with team to help them create goal and action plans, build winning strategies, hone skills, and stay on task and on target The most difficult thing company need to solve that is sales force management because salespeople bridge the gap between customer needs and the product or service that fulfills that need So, to improve sales management company make a compensation procedure to compete with other companies and keep training and coaching sales force to help them improve their ability so that they can improve sales performance and could boost sales so that company can maintain business and expand company in the future PART I – INTRODUCTION Company background R Star Co., Ltd., formerly known as Ruby Star Co., Ltd, was established on September 27, 2011, which operates on the business of trading, importing, exporting and distributing baby toys, maternity & baby wear On November 11, 2016, the company was renamed to R Star Co., Ltd along with the continuous development not only in sales, but also in facilities, personnel Our company now supplies 100% made products in: Thailand, Malaysia, Korea, Turkey In addition to the KIDART brand of clay, Smile Kids made in Thailand, we are the exclusive distributor of famous toy brands in Turkey such as Let's Powder, Furkan and Ucar Toys And exclusive distributor of Malaysian Sunta Baby Foam EVA Foam Product All products are intellectual and highly educated for children: awakening creative thinking, logical thinking, stimulating imagination; improve teamwork skills, develop teamwork skills and community integration skills in the future Internal structure The internal structure of the company is a functional structure, is showed in the graphic as follow: 2 Company symptoms R Star company has been operating for more than years, so it is still very young company compare to other companies in this industry So It has to face so many difficult to survive and compete to the same companies to gain high market share At the moment, R Star has a problem that sales has decreased for consecutive years From the balance sheet of R Star company from 2015 to 2017, Sales has decreased slightly Specially in 2016 sales was 18.01 billion, down 7.4 % from 19.45 billion in 2015, and in 2017 sales was 16.8 billion, down 6.72% from 18.01 in 2016 Unit: Billion Chart 1: Sales of R Star company Source: Sales department of R Star company There are so many reasons lead to sales decrease Beside some internal factors, external factors like recession economy, political or some policies of the government also effect to sales decrease In the case of R Star, we are also consider sales of some companies in the same industry to find out if external factors also effect these company or not Chart below show sales of some companies Source: http://nhantokhai.tct.vn/ihtkk_cbt/tcuuTkhai.do?pagenumber=3 Compared to another companies in the same industry, like Thanh Nga sales increased sharply, in 2016 increased 124.5 % from 51.5 billion to 115.5 billion and in 2017 increased 8.7% from 115.5 billion to 125.6 billion And Dinh Diem sales increased quite sharply, in 2016 increased 37.7 % from 20.4 billion to 28.1 billion and in 2017 increased 16.7% from 28.1 billion to 32.8 billion From some figures show above, Sales of Phuong Nga and Dinh Diem are also increased sharply while sales of R star decreased slightly So some external factors like politic, government policy and recession economy did not affect those company in the Toys industry The results of sales decrease that made the profit also decreased, the chart below show data of profit from 2015 to 2017 of R Star company From 2015 to 2017, the profit decreased sharply, in 2016 the profit decreased 8% compared to 2015 and 2017 the profit decreased 21% compared to 2016.So sales decrease of R Star is consider a problem and need to investigate furthermore to find out why sales decrease I choose only this symptom to investigate futhermore because sales is extremely important for every company, it brings money in to help its maintain business of company If sales decrease, it leads to operating profit decrease or even loss With situation of R Star at the moment, sales decrease need to be solved to continue operating business In the next part, I will conduct some in-depth interviews and use some theories to find out the central problem of sales decreased PART II – PROBLEM IDENTIFICATION Content of in-depth interviews From the symptoms which mentioned above that are sales decreased for consecutive years, to find out what is the main problems so that I conduct the in-depth interviews with sales manager, Chief executive officer, marketing manager, marketing staff, salespersons These interviews help me to find down what are going wrong in the R Star company and what central problems are, after that I find some literature review to find some potential problems and collect some data to verify the central problems In the first interviews, the problems were found out that made sales decrease: Firstly, many competitors in the same industry that why company lose the market share, lose the current customers and it is very hard to find deal with customers because other companies are having a strong sales team than R Star and they have been doing this business for a long time such as Phuong Nga, Dinh Diem company Secondly, some salesperson said that the company has poor sales strategy because it is not clearly defined, not documented in writing Thirdly, R Star has a weak sales force as sales manager said that the number of salespeople decrease 25% compare to the period year so that the workload is very heavy Fourthly, company has a poor coaching because sales manager is so busy with his job and could not have time to coach salespeople properly Base on the data collected and interviews with members of R Star company, the initial cause and effect tree has been developed 2015 2016 2017 Number of recruitment Salesperson turnover Interview guide 1.Personal information: name and position within the company 2.As you know that sales decreased for years from 2015 to 2017, what are the reasons for sales decrease? Prompt Do you face any difficult things in your job? What you think about your company sales strategy? 5.Does your company often organize training skills course for salesperson? What you think about your company sales coaching? What you think about your company sales recruitment? 8.What you think about marketing strategy? 9.What you think about sales leadership? TRANSCRIP OF IN-DEPTH INTERVIEW Location of interview: R Star Office, HCM city, Vietnam Time: 0600pm, 16 August 2017 Transcript Interviewer: Hello, I’m Truong Thank you for taking your time I am doing a research about problem solving in R Star company Would you mind if I asked you some questions to assist me in my research I’m sure that it will not take too much your time Could you please introduce about yourself? Interviewee: Ok My name is Xuyen, I’m 40 years old, I am a director and founder of R Star company 37 Interviewer: Thank you, as you know that sales decreased for years from 2015 to 2017 As a director, what are the reasons for sales decrease? Interviewee: From 2015 to 2017 sales has decreased quite sharply, there are some reasons that lead to sales decrease include internal factors and external factors For external factors, what is the main reason is competitors like Phuong Nga, Dinh Diem who those are top companies in kid toys industry They have been in the market for more than 20 years, for our company, we just started for years and we are a very small company, so it is very difficult for us to compete to them For internal reasons, sales manager did not manage sales force well enough, for example they did not have a proper sales strategy, as a monthly report , the number of new customers was very low, and sales rep turnover is exceptionally high, some of salespeople could not meet sales target Interviewer: Could you please give me more details about that? Interviewee: Yes, of course, for example when we recruited new salesperson, after working for month or month, and they thought it was a hard job and stress full or they could not meet sales target so that they quit job It takes time and money to employ new salesperson Interviewer: How does company hire salespeople? Interviewee: Normally, sales manager will be responsible to employ salespeople, it is so simple to recruited the new one but it is hard to keep them and the most important things to train and motivate them to work well Interviewer: Ok, I see, Did you know why salesperson quit job? how you employ new salesperson? Interviewee: When they applied for leaving job, I did talk to them why they 38 wanted to stop working because they cannot meet sales target and work under pressure, some of them find a new job that suit their major, low salary Normally sales manager recruit salespersons for their team by testing and interviewing, but we need new sales person have at least year experience because so we don’t have to train them and they can start working straight away At the moment it is very hard to employ new one so if we can deal salary and commission we will sign contract with them Interviewer: What you think about sales coaching at R Star? Interviewee: I think sales manager need to have a clearer coaching program, and should give feedback to salespeople more and should motivate and follow tightly to understand salesperson and help them to improve their skills and their potential Interviewer: Ok, Thank you very much, I hope you have a good day at work Interviewee: Thank you, have a nice day Transcript Interviewer: Hello, I’m Truong Thank you for taking your time I am doing a research about problem solving in R Star company Would you mind if I asked you some questions to assist me in my research I’m sure that it will not take too much your time Could you please introduce about yourself? Interviewee: My name is Hoa, I’m a sales manager of R Star company, I have been working here for years Interviewer: Thank you, as you know that sales has decreased for years from 2015 to 2017 As a sales manager, what are the reasons for sales 39 decrease? Interviewee: High competitive is one of reason that sales was down, many companies in the same products like our company such as Dinh Diem, Phuong Nga company and I think our company has a weak sales force, before we have 10 members, but now in total we have members in sales department, sales manager, salesperson for general trade ( GT) and sales person for modern trade (MT) And sometime our salesperson could not meet sales target so they left company, that’s why R Star have to recruit new sales person and it will take time and money for recruiting and Training Of course when new salesperson starts working, they cannot be productivities than old members because they will need time to get used to with new jobs so that we lost current customers to other company because we did not take good care of them Interviewer: So why did they left the company? was sales target high and heavy workload? Interviewee: If sales person does not meet sales target for consecutive months, The warning letter will send to them, and if they still cannot meet sales target, they will be sacked Interviewer: So normally, for how often does salesperson leave company? is it easy to recruit new salesperson? Interviewee: For average, every two months would have salesperson leave company and it is quite hard to employ new salesperson with experience, we normal recruit new students or who have or years working experience Interviewer: Hum, what did your company to boost sales? Interviewee: We have so many program to boost sales such as buy one get one free, join trade fair to advertise our products, promotion on special 40 day like children’s day Furthermore we are trying to recruit experience salespersons to enhance our sales force and boost revenue Interviewer: Do you face any difficult things in your job? Interviewee: As a sales manager and with a lot of workload, imp so busy and I have a lot of things to for example, I have to recruit new salesperson every month, manage sales force, sales forecast, make reports to director, make sales strategy, coaching But the most difficult thing is when salesperson stops working, I have to recruit new one and training, coaching it takes time and money of R Star Interviewer: How does company hire salespeople? Interviewee: Normally, I will be responsible to employ salespeople, it is so simple to recruit the new one but it is hard to hire right salespeople and keep them and the most important things to train and motivate them to work well So our company need to improve recruitment process and selection and other training course to support sales team Interviewer: Ok Thank you very much have a good day Interviewee: Ok, Thank you very much Transcript Interviewer: Hello, I’m Truong Thank you for taking your time I am doing a research about problem solving in R Star company Would you mind if I asked you some questions to assist me in my research I’m sure that it will not take too much your time Could you please introduce about yourself? Interviewee: My name is Phuc, I’m a salesperson, I have been working for general trade for years 41 Interviewer: Thank you, as you know that sales has decreased for years from 2015 to 2017 Do you know what the main reasons are? Interviewee: Well, The number of salesperson in my team were down from to 5, in the GT we have people but we have to manage so many areas, markets so we are so busy to take care current customers and have no time to develop new customers Interviewer: Can you give me some examples? Interviewee: Like we are busy to take care current customers but if we don’t take good care of them, we will loss them for competitor Interviewer: Do you mean the workload is too much so that you can’t look after customers well? Interviewee: Yeah, I have to find new customers, contact customers, negotiation with them about price, payments and delivery goods and every week have to reports for my boss Interviewer: Do you often meet sales target every month? Interviewee: Maybe or month don’t meet sales target because sometime I have a problem with dealing with new customers and make contracts, sometime they want to have a bigger discount from my company and I cannot compromise with customers Interviewer: If something like that happened, you often discuss with your boss what you normally have to face? Interviewee: Yes, I did talk to my boss but I think I have to improve my sales skill like negotiation skill, persuading skill, problems solving skill to help me in my job Interviewer: Does your company often organize training skills course for salesperson? Interviewee: Actually our sales manager train for us about products and some 42 ways to find customers and we start to work and learn from each other but I think our company need to train salesperson more because when I first started working here, I was not trained properly about sales skills so I have to learn from other salesperson Interviewer: As I know some salesperson in your department did not meet sales target, you know what are the reasons? Interviewee: Well, in my opinion, some of them lack of experience and they are not well train enough some of them even work for companies in the same time or they don’t have motivation to work here I have had some conversation with salesperson, they said that they just want to work here because it is easy to get a job here or they have not found a suit a job yet so they want to get experience Interviewer: Ok, What you think about your company sales strategy? Interviewee: Actual, our sales strategy is not good enough ,sales decrease for consecutive years so we need to have a strategic plan to improve the situation Interviewer: What you think about your company sales coaching? Interviewee: In my opinion, my sales manager should control and train salespeople more and motivate them more to help them meet sales target, Interviewer: Ok, Thank you very much, have a nice day Interviewee: Ok Thank you, have a nice day Transcript Interviewer: Hello, I’m Truong Thank you for taking your time I am doing a research about problem solving in R Star company Would you mind if I asked you some questions to assist me in my research I’m sure that it will not take too much your time Could you please 43 introduce about yourself? Interviewee: My name is Phuong, I’m a salesperson, I have been working for general trade for months Interviewer: Oh, have you ever worked as salesperson before? Interviewee: Yes, I used to work for another company as salesperson but different industry, I worked for Pham Nguyen company which they sell cakes, candies Interviewer: Oh yeah, so at least you have experience, when you started work with R star company, you have any difficult at your job? Interviewee: I think it is ok for me because I get used to work as salesperson, but I think R star should training more for salespersons, from the time I work here, I have never join any training class for sales except the first time the sales manager introduced about products so I work until now Interviewer: What were your performance for the last months? Interviewee: Because I have been working her for months, so I have to face many difficulty things so I did not meet my sales target and new customer target I need to work hard and improve my sales skill to meet my target Sometime I nearly get a new customers but because of lack of negotiation skill and persuading skill so I could not sign contract with them Interviewer: Do you think your company need to more training and coaching to support your job? Interviewee: Yes I think so but our company is a small company so it costs a lot money for training us Interviewer: As I know some salesperson in your department did not meet sales target, you what are the reasons? Interviewee: Some salespeople lack of experience and they don’t know what to 44 do, I think they need to be coached and training properly Interviewer: Ok, What you think about your company sales strategy? Interviewee: Actually, our strategy is the same, and we just follow the procedure of sales, sometime we concentrate on this product, sometime different products when I try to develop new customers, I don’t know where to start so I marketing online on social network to find but it is not effective Interviewer: when you get trouble with your job, does anyone support you? Interviewee: Yeah, my coworker support me a lots and help me to get overcome its Appendix 4: Secondly interviews Transcript Interviewer: Hello, I’m Truong Thank you for taking your time I am doing a research about problem solving in R Star company Would you mind if I asked you some questions to assist me in my research I’m sure that it will not take too much your time Could you please introduce about yourself? Interviewee: My name is Thanh I’m 32 years old Now I’m working as marketing manager at R Star company I have been working here for years Interviewer: mum, what exactly you in your department? Interviewee: : I make some marketing campaigns and produce valuable and engaging content for our website and blog that attracts and converts our target groups, Be in charge of marketing budget and allocate funds wisely Interviewer: Could you please tell me what company did in the past? 45 Interviewee: : Our company join many exhibition fairs to display and introduce our products to customers, and support sales department to boost sales Interviewer: As you know, sales has decrease for consecutive years, what you think about that? Interviewee: Well, Before every campaign, our department and sales department always have a meeting and support each other to meet our target Beside that we often advertise often on face book, Google, zalo Those social network are very famous and a lot of people in Viet Nam use them But one thing our company are always consider that is company budget because R Star is a small company and source of finance is not much for marketing so for every campaign we have to cut down the costs So it would affect the quality of our campaign Interviewer: How much money does company can spend for marketing in a year? Interviewee: It is about 150 million for a year, it is not much because each exhibition fair cost about 20 million so that in a year, our company just join or Interviewer: so you mean that low budget is that a problem that lead to sales decrease? Interviewee: Actually, I think marketing is good so that company can attract customer and let people know about our products Many big companies they spend a lot of money for marketing so it could help company to sell products If company have weak marketing strategy so that company cannot take competitive advantage in the 46 market, Customers does not know about products So if company have a big marketing budget, it is good to take advantage Interviewer: ok Thank you very much Interviewee: Thank you, have a good day Transcript Interviewer: Hello, I’m Truong Thank you for taking your time I just interviewed marketing manager and he said that the budget for marketing is very low in your company ,what you think about that? Interviewee: Well, That is true, our budget for marketing is not high because our company is very small and weak finance so that we have to balance everything, we still the good things like advertise on face book, Google, zalo and join some fairs So it depends on budget, marketing department could not choose the best way to advertise Of course I would like to the best to have company developed and I think in the future we will spend more money on marketing to take competitive advantage in the market so that it can increase sales in the future Transcript Interviewer: Hello, I’m Truong Thank you for taking your time What you think about marketing strategy in your company? Interviewee: Well, marketing department support our department very well, They are concentrate on advertise on social website like zalo, Google, face book and established website Sometime our company 47 take part in some trade fairs and some events to advertise our products As I know the budget for marketing is very low, so they have to consider which fairs or events they join to reduce the costs Interviewer: After your company joined events and trade fairs, what was the result? Interviewee: Well of course, when we take part in trade fair and events which are good ways to approach new customers and can boost sales but not very much Interviewer: Ok Thank You Transcript Interviewer: Hello, I’m Truong Thank you for taking your time Please tell me about yourself? As director said that the sales rep turnover is high, could you give me some data and reason why? Interviewee: I have been working here for years as a human resource manager Interviewer: As director said that the sales rep turnover is high, could you give me some data and reason why? Interviewee: I have been working here for years as a human resource manager Recently, salesperson turnover is quite high at R Star company In 2016 the number of sales rep that we recruited were 9, and left In 2017 the number of sales rep that we recruited were 8, and left Some reasons why they left were working under pressure, low compensation, or they could not meet sales target Interviewer: Do you know what are the main reasons that salesperson leave their job? Interviewee: I did ask them some questions why they leave the job, some of them said that they have a new job suit their major and higher salary, some of them said that the job was very stress , high sales 48 target Interviewer: Ok Thank you very much, have a good day Transcript Interviewer: Hello, I’m Truong Thank you for taking your time again After interview and literature review I found that your company has a poor sales management, the main causes of that are poor coaching and poor recruitment and training? What you think about that? Interviewee: I think my company need to improve sales management by make a clearer sales recruitment and training and sales manager need to make clearer sales coaching like motivation, giving feedback, set KPI, follow step by step salesperson Interviewer: Ok, Thank you very much, have a nice day Interviewee: Ok Thank you, have a nice day 49 Reference list Baldauf A, Cravens DW, Piercy NF Examining business strategy, sales management, and salesperson antecedents of sales organization effectiveness Journal of Personal Selling & Sales Management 2001;21(2):109-22 Hisrich RD, Jackson RW Selling and sales management: Barron's Educational Series; 1993 Calvin RJ Sales management: McGraw Hill Professional; 2004 Futrell C, Futrell C Fundamentals of selling: Irwin Homewood, IL; 1993 Fornell C, Wernerfelt B Defensive marketing strategy by customer complaint management: a theoretical analysis Journal of Marketing research 1987:337-46 Weitz BA, Bradford KD Personal selling and sales management: A relationship marketing perspective Journal of the academy of marketing science 1999;27(2):241-54 Jaramillo F, Grisaffe DB, Chonko LB, Roberts JA Examining the impact of servant leadership on sales force performance Journal of Personal Selling & Sales Management 2009;29(3):257-75 Jones E, Brown SP, Zoltners AA, Weitz BA The changing environment of selling and sales management Journal of Personal Selling & Sales Management 2005;25(2):105-11 Dictionary B Business dictionary Retrieved April 2012;17:2012 10 Jantan MA, Honeycutt Jr ED, Thelen ST, Attia AM Managerial perceptions of sales training and performance Industrial Marketing Management 2004;33(7):667-73 11 Olorunleke GK INFLUENCE OF SALESPERSONS’COMPENSATION ON PERFORMANCE DURING SALES PROMOTION OF SELECTED COMPANIES IN ILORIN, NIGERIA Nigerian Journal of Applied Behavioural Sciences 2014;236:244 12 Mathews BP, Redman T Recruiting the wrong salespeople: are the job ads to blame? Industrial Marketing Management 2001;30(7):541-50 13 Jolson MA When salespeople fail: Assessing blame Industrial Marketing Management 1999;28(1):19-26 14 Chapman DS, Webster J The use of technologies in the recruiting, screening, and selection processes for job candidates International journal of selection and assessment 2003;11(2‐3):113-20 15 Dubinsky AJ Salesperson failure: Sales management is the key Industrial Marketing Management 1999;28(1):7-17 16 Jobber D, Lancaster G Selling and sales management: Pearson education; 2006 17 Weber A, Thomas R Key performance indicators Measuring and Managing the Maintenance Function, Ivara Corporation, Burlington 2005 18 Yu L The benefits of a coaching culture MIT Sloan Management Review 2007;48(2):6 19 Pousa C An Initial Assessment of Measurement Invariance in Sales Force Coaching: Comparing the French and Spanish Versions of Ellinger’s Coaching Measure Celebrating America’s Pastimes: Baseball, Hot Dogs, Apple Pie and Marketing?: Springer; 2016 p 767-72 20 Doyle SX, Roth GT Selling and sales management in action: The use of insight coaching to improve relationship selling Journal of Personal Selling & Sales Management 1992;12(1):5964 21 Anderson MC Executive briefing: Case study on the return on investment of executive coaching Retrieved March 2001;12:2008 50 22 Collins CJ, Smith KG Knowledge exchange and combination: The role of human resource practices in the performance of high-technology firms Academy of management journal 2006;49(3):544-60 23 Pousa C, Mathieu A Sales managers’ motivation to coach salespeople: An exploration using expectancy theory 2010 51 ... to poor sales management which are poor coaching, poor recruitment, poor sales strategy But from theoretical, some main causes of poor sales management are below:  Poor sales strategy  Poor recruitment... sales strategy Poor customer service Poor recruitment and training Poor sales management Losing of current customers Sales from general trade decrease Sales decrease High salespeople turnover... solve that poor recruitment and poor training problems, company a properly recruitment procedure to hire right salespersons after that company well training to make sure salesperson have enough