Part II SALES FORCE ACTIVITIES Chapter 3: Sales Opportunity Management

Learning Objectives: Describe effective steps for generating new accounts. Describe effective steps for generating new accounts. Explain how to determine the minimum opportunity a salesperson should pursue. Explain how to determine the minimum opportunity a salesperson should pursue. Describe four methods for setting opportunity priorities. Describe four methods for setting opportunity priorities. Explain why emphasis is shifting from sales volume to profit flow. Explain why emphasis is shifting from sales volume to profit flow.

Chapter Outline: The Process For Generating New Accounts. The Process For Generating New Accounts. Managing Existing Accounts. Managing Existing Accounts. Sales Versus Profits. Sales Versus Profits. Time Management. Time Management.

Sales Opportunity Management Generating New Accounts Managing Existing Accounts Personal Time Management Sales Versus Profits

What is Sales Opportunity Management. It is the process of prioritizing the company’s resources to increase the sales productivity. It is the process of prioritizing the company’s resources to increase the sales productivity. To increase productivity sales force should focus their efforts on those prospects that have a high probability of becoming important customers. To increase productivity sales force should focus their efforts on those prospects that have a high probability of becoming important customers.

Two ways to grow sales: 1.Obtain new customers. 2.Grow the business with the existing customers.

What is the best way to grow? Acquiring New Customers Mergers and Acquisitions Introducing New Products Increasing Business with Existing Customers 42% 33% 10% 15% Figure 3-1: What’s the Best Way to Grow?

The Process For Generating New Accounts. There are three steps to generate new accounts: 1.Building a Prospect Profile. 2.Building a Prospect List. 3.Qualifying Prospects.

First: Building a Prospect Profile. Examples of demographics frequently used to build a prospect profile includes: Size of the Business. Size of the Business. Business Product Specialty. Business Product Specialty. Geographic Distance from shipping points. Geographic Distance from shipping points.

Second: Building a Prospect List. 1. Direct Inquiry Advertising Direct Mail Trade publications Trade shows 2. Directories – Thomas Register 3. Referrals 4. Cold Canvassing

Third: Qualifying Prospects 1.Needs for your products/services. 2. Authority to make purchase. 3. Ability to pay.

Siebel Systems, Inc.: Assessing the Opportunity Is There an Opportunity? 1Customer’s Application or Project 2Customer’s Business Profile 3Customer’s Financial Condition 4Access to Funds 5Compelling Event Can We Compete? 6Formal Decision Criteria 7Solution Fit 8Sales Resource Requirements 9Current Relationship 10Unique Business Value Can We Win? 11Inside Support 12Executive Credibility 13Cultural Compatibility 14Informal Decision Criteria 15Political Alignment Is it Worth Winning? 16Short-Term Revenue 17Future Revenue 18Profitability 19Degree of Risk 20Strategic Value

Managing Existing Accounts. Managing Existing Accounts is best achieved through prioritizing opportunities with the existing accounts. Managing Existing Accounts is best achieved through prioritizing opportunities with the existing accounts. But First we should know when is an Account too small? (Not Profitable) or determining the minimum opportunity on which a salesperson should be spending time on. But First we should know when is an Account too small? (Not Profitable) or determining the minimum opportunity on which a salesperson should be spending time on.

A Minimum Account Size Analysis: This analysis involves two steps: 1.Calculating the cost per sales call. 2.Calculating the breakeven sales volume.

Table 3-1 Calculating the Cost per Call for an Industrial Products Salesperson: ExampleCompensation Salary, commissions, and bonus$69,035 Fringe benefits (hospital, life insurance, social security)$10,985$80,020 Direct Selling Expenses Automobile8,000 Lodging and meals6,250 Entertainment3,250 Communications4,500 Samples, promotional material1,750 Miscellaneous1,70025,450 Total Direct Expenses$105,470 Calls Per Year Total available days260 days Less: Vacation10 days Holidays10 days Sickness5 days Meetings18 days Training12 days55 days Net Selling Days205 days Average calls per day3 calls Total Calls per Year (205 X 3)615 Calls Average Cost per Call ($105,470/615) $171.50

Calculating Sales Volume: Breakeven Sales Volume (Cost per Call) x (Number of Calls to Close) Sales Calls as a % of Sales

An Example: Cost per sale call= $ Calls needed to close a sale= 2.8 Sales Calls expenses of sales = 3.4% Breakeven Sales Volume = ([$165.80*2.8]/0.034) = $13,654

I cannot Afford to Lose this Business: Should a salespeople not call on customers whose sales volume does not exceed the minimum sales volume? Should a salespeople not call on customers whose sales volume does not exceed the minimum sales volume? Salespeople and Companies too, are rarely inclined to turn their backs to a sale. Salespeople and Companies too, are rarely inclined to turn their backs to a sale.

Factors Must Be Considered Before Dropping a Customer: Growing Customer and Growing Sales. Growing Customer and Growing Sales. The Location of the Customer. The Location of the Customer. Purchase of High-Profit Products. Purchase of High-Profit Products. Can You think of more factors?

Setting Account Priorities. There are four methods for setting account priorities: 1.Single- Factor Model. 2.Portfolio Model. 3.Decision Model. 4.Sales Process Model.

Single- Factor Model: (ABC) A C B $1,630 $3,261 $4,891 $6,522 $8,153 $9,784 Average Sales Volume Per Month Number of Sales Calls Per Month

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

Dollar Sales per Quarter Number of Sales Calls Per Quarter $20,000 $10, Decision Model

Unqualified Qualified Best few 50% closure probability 75% closure probability 90% closure probability Sales Process Model

Sales versus Profits: Should we focus on customer’s sales volume or on customer’s profitability? Should we focus on customer’s sales volume or on customer’s profitability? Is a big customer more profitable than a small customer? Is a big customer more profitable than a small customer? Are the costs to serve different customers the same? Are the costs to serve different customers the same? What is Customer Lifetime Value? (CLV) What is Customer Lifetime Value? (CLV)

Time Management: Time is a very important resource, and significant productivity gains can be made through efficient time management. Time is a very important resource, and significant productivity gains can be made through efficient time management.

Selling Face-to-Face Service Calls Administrative Tasks Waiting and Travel Figure 3-5: How Salespeople Spend Their Time Selling over the phone

Emergencies Personal Growth Personal Growth Time Wasters Time Wasters Recreation Importance High Low High Low Urgency Figure 3-6: Time Management