10. Strategy and sales program planning

Sales department objectives Achieve sales revenue of $210 million Grow contributions after sales expenses by 25%.. Sales district objective.[r]

Part I

THE BIG PICTURE

Chapter 2:

The natural progression

Business Strategy Business

Strategy MarketingMarketingStrategyStrategy

Go-to-Market Strategy Supply Chain Management (SCM) Customer Relationship Management (CRM) LEVEL 2

Strategy

Implementation

Decisions Product DevelopmentManagement

(PDM) LEVEL 1

Top

Management Decisions

Figure 2-1 The Sales Force Decision Sequence

Figure 2-2

: Factors Influencing Strategic Management

Distinct competencies Marketing Financial Technology Information Distinct competencies Marketing Financial Technology Information Environmental constraints Legal & regulatory

Demographics Economic Conditions Technology Competitive conditions Sociocultural factors Environmental constraints Legal & regulatory

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 points Grow contributions after sales & marketing by 20%

Marketing objectives

Increase product A’s market share by 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

A Look into What

0 10 70 60 50 40 30 20 29.8% 31.9% 66.1%

7.7% 14.0% 7.8%

Building Brand of Company/ product Enhancing credibility of company product Increasing sales/ revenue Investor

relations Savingcosts Other

0 100 60 80 40 20 Building Brand of Company/ product Enhancing credibility of company product Increasing sales/ revenue Investor

relations Savingcosts Other

How Successful Were You at Reaching Your Goals?

Types of Strategies (Generic)

and Their Effect on Sales

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 Marketing Strategies Sales Strategies Hold Strategy Maintain market share at the lowest costs possible

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

Sales Force Ranking and Sales Growth:

Pharmaceuticals (1988-1990)

Low

High

Sales Force Ranking and Sales Growth:

Computers (1988-1990)

Low

High

A More Detailed Look at

Marketing Strategy



The Three Major Functions of

Marketing:

–

Segmentation

–

Targeting

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?

Figure 2-6 Essential Activities

Interest Creation

Purchase

Large

Small

Low Information, Low Solution Needs

High Information, High Solution Needs

Buying Process Customer Size

and Opportunity

Direct Sales Force Direct Sales Force Agents Distributors Retailers Agents Distributors Retailers Integrators

Integrators AlliancesAlliances AdvertisingPromotion Direct Mail Advertising Promotion Direct Mail Tele-marketing

Tele-marketing InternetInternet

Direct Indirect

Non-Sales Force Options Sales Force Options

Company

Company

Customers and Prospects

Customers and Prospects

Figure 2-8

Comparing Various Go-to-Market Alternatives

Advertising

Direct Mail

Internet

Telemarketing

Sales Force

Effectiveness Efficiency

High Sales per Exposure Low Cost

Customer Base

Customer Base

Account

Teams GeographicSales Force Direct Sales Force

Industry

Teams Inbound Outbound

Telemarketing Partners Internet

Customer Base

Customer Base

Account Teams

Direct Sales Force

Inbound

Telemarketing

Customer Base

Customer Base

Account Teams

Geographic Sales Force

Direct Sales Force

Inbound

Telemarketing

Partners

Customer Base

Customer Base

Account

Teams GeographicSales Force Direct Sales Force

Outbound Inbound

Telemarketing 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

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

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

• 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

Shareholder Value

Driver of Cash Flow & EVA

• 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

Business

Driver of Profits

• 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

Figure 2-12

Sales Force Program

Marketing Objectives, Strategy, and Strategy Implementation Program

Marketing Objectives, Strategy, and Strategy Implementation Program

Account Relationship Strategy

Account Relationship Strategy

Desired Selling Actions and Behaviors

Desired Selling Actions and Behaviors

Organizational Structure

Organizational Structure

Competency Development Program

Competency Development Program

Leadership System

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

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?

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?

Investment

by

Supplier

Investment by Customer

Tran sactio

nal

Relat ionsh

ip

Cons ultati

ve

Relat ionsh

ip

Enter prise

Relat ionshi

p

Different Sales Orientations

Sales Argument Profile of Sales Customer Contacts Offering Success Factors Best products “Product Expert” Narrow Space (e.g., purchasing)

Best products with a competitive price

Product excellence and/ or cost leadership

Product Sales

Solutions to your needs

“Solution provider”

Function/ department

Product and service solutions to customer needs

Understanding the customer’s needs

Solution Sales

Impact on your business results

“business consultant”

All levels

Valuable solutions to support competitive advantage

Driving customer profits and EVA