1. Sales Opportunity Management
MGT607
Topic 3
MGT607-T2,2016

2. 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.
MGT607-T2,2016

3. 3.1: Effective Steps for Generating New Accounts.
building a prospect profile
Building a prospect list
Qualifying prospects
MGT607-T2,2016

4. 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.
MGT607-T2,2016

5. 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.
MGT607-T2,2016

6. 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
MGT607-T2,2016

7. 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.
MGT607-T2,2016

8. 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.
MGT607-T2,2016

9. Breakeven sales costs as a % sales E.g.:
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 * =
10.3
MGT607-T2,2016

10. # 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
MGT607-T2,2016

11. 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.
MGT607-T2,2016

12. Single Factor Model Portfolio Models Decision Models
Sales Process Models
MGT607-T2,2016

13. 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.
MGT607-T2,2016

14. 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.
MGT607-T2,2016

15. 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
MGT607-T2,2016

16. 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.
MGT607-T2,2016

17. 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
MGT607-T2,2016

18. 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.
MGT607-T2,2016

19. 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)
MGT607-T2,2016

20. Sales funnel – means placing sales opportunities in a funnel.
- 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.
MGT607-T2,2016

21. The Sales Funnel 13 21 15 22 14 19 Unqualified 12 11 10
Unqualified 10
50% closure probability 5
75% closure probability
Qualified
3 4
1 2
Best few
90% closure probability
MGT607-T2,2016

22. 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)
MGT607-T2,2016

23. 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.
MGT607-T2,2016

24. 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
MGT607-T2,2016