Sales Opportunity Management Topic 3

Aim: Sales opportunity management 3.1 Describe the effective steps for generating new accounts. 3.2 Explain how to determine the minimum opportunity a salesperson should pursue. 3.3 Describe four methods for setting opportunity priorities and indicate when each method should be used. 3.4 Identify how salespeople can manage their time more efficiently.

3.1: Effective Steps for Generating New Accounts. building a prospect profile Building a prospect list Qualifying prospects

building a prospect profile Building a prospect profile – start with review of target markets stated in your marketing plan. Internet can also be of use – govt stats, journals etc.. Use of demographics such as size of business, age equipment to be replaced.

Building a Prospect List: Traditional method was use of cold canvassing (contacting prospective customers with out appointments) e.g Avon. Direct mail – at times from customers Trade shows Directories – open to bid announcements Internet – wealth of information available. Referrals – satisfied customers provide names of others.

Qualifying Prospects: Determine if the prospect is likely to be converted to a buying customer. Salespersons must know the following: - needs (already satisfied customer with supplier may not want to change) - buying authority - ability to pay

Managing Existing Accounts Minimum Opportunity Generating new accounts is important as well as maintaining strong customer loyalty. In managing existing accounts need to determine min. opportunity on which you should be spending your time. Analyse: - cost per call - breakeven sales volume indicates min. size customer that should be pursued.

Breakeven Sales volume requires knowledge of number of calls necessary to close a sale and direct selling expenses. Once BESV is determined other factors must also be considered before dropping a customer. Such as increase in account may be due to customers increase in business or your sales to the customer is increasing.

sales volume = cost/call * # of calls to close deal Breakeven sales volume = cost/call * # of calls to close deal sales costs as a % sales E.g.: Selected statistics for a number of companies on cost per call & number of calls needed to close a sale is given below. = 46 * 4.6 = 20.54 10.3

# of calls needed to close sale Sales costs % of total sales Industry Cost per call $ # of calls needed to close sale Sales costs % of total sales Business ser 46 4.6 10.3 Chemicals 165.80 2.8 3.4 Construction 111.20 7.1 Electronics 133.30 3.9 12.6 Food products 131.60 4.8 2.7 Instruments 226.00 5.3 14.8 Machinery 68.50 3.0 11.3 Office Equip 25.00 3.7 2.4 Printing 70.10 4.5 22.2 Rubber/plastic 248.20 4.7 3.6

3 Methods for Setting Account Priorities: BE provides starting point to determine min. account that should be called on. But does not indicate how much time to give to prospecting & to existing accounts in an area. Prioritizing sales opportunities needs account analysis – estimating the present & future importance of accounts to your business & allocating time to maximise sales productivity.

Single Factor Model Portfolio Models Decision Models Sales Process Models

Single Factor Model Widely used for allocating salespeople's time. Classifying customers into A,B,C.. depending on sales volume sales effort is given to those accounts. Thus A accounts are given more time compared to B or C accounts. One limitation is that focuses of current sales, may not include all other factors.

Portfolio Models: Overcome limitations of 1st model by considering multiple factors. Selling effort is allocated so that most attractive accounts receive the most effort. Accounts are place in 1 of 4 categories based on account opportunity (present & future need, growth) & competitive position (strength of salespersons present relationship with an account). Mostly likely for consultative type account relationship strategy. Disadvantage – accs are grouped, diff between firms not catered for.

Accounts are very attractive Competitive Position Strong Weak Core Accounts Accounts are very attractive Invest heavily in selling resources Growth Accounts Accounts are potentially attractive May want to invest in heavily Drag Accounts Accounts are moderately attractive Invest to maintain current competitive position Problem Accounts Accounts are very unattractive Minimal investment of selling resources Account Opportunity High Low

Decision Models Focus on the response of each acc to the # of sales calls made over a period of time. The 1st part develops relationship between # of sales calls over a period of time & sales to a particular account – known as sales response function. RF comes from regression or historical data. 2nd part of the model- continue sales calls to an acc until more sales can be generated by another account.

Number of Sales Calls Response Function Customers will not respond dramatically upon 1 or 2 calls per quarter but sales are expected to increase fast when the # of calls increases from 2. $/sales # of sales calls

Sales Process Models: With industrial & high tech goods & where many people are involved in purchase decision, selling cycle can be long due to $ commitment. Focus on where the opportunity is currently classified in the selling process. Opportunities are assigned to different stages of the selling process. Multiple opportunities exist in the same account.

The sales funnel developed for HP training salespeople. Categorizes & priorities sales opportunities or objectives not accounts bec a sales person may have multiple selling objectives at 1 acc. Each sales opportunity is categorised: - unqualified opportunity – a possible need exists, but not verified (e.g. you learnt a customer’s contract with a competitor has expired)

- qualified opportunities – must meet 4 criteria (need has to be verified, confirmed intention to buy, funds approved for purchase, specified time for purchas to be done). - best few opportunities – all buyers contacted & need identified. In salesperson’s judgment ready for sale. Sales funnel – means placing sales opportunities in a funnel.

The Sales Funnel 13 21 15 22 14 19 Unqualified 12 11 10 13 21 15 22 14 19 Unqualified 12 11 10 50% closure probability 5 8 6 75% closure probability Qualified 3 4 1 2 Best few 90% closure probability

Sales Versus Profits The shift to managing territory profits requires that companies pinpoint their costs, measure account profitability, & provide this infor to sales people. They can then manage dispersion of customer profitability in 3 ways: - allocation of effort - mix of products - price concessions (should be reluctant to offer to close a deal)

Time Management: A good sales call route that minimizes travel time & costs: Route should be circular Route should never cross itself Same route should not be used travel to & from a customer. Customers in neighboring areas should be visited in sequence.

Overall Time Management: A key aspect to managing time effectively is to recognize & control things that tend to waste time. Time is wasted on: Telephone interruptions Drop in visitors Lack of self discipline Lack of objectives, priorities & deadlines Indecision & procrastination Attempting too much at once Leaving tasks unfinished Unclear communication