Part I

THE BIG PICTURE

Strategy and Sales
Program Planning
LEVEL 1
Top Business Marketing
Management Strategy Strategy
Decisions

Customer
Go-to-Market
LEVEL 2 Relationship
Strategy Management (CRM)
Strategy
Implementation Supply Chain Product Development
Decisions Management (SCM) Management
(PDM)

LEVEL 3
Sales Force Account Relationship
Program Strategy
Decisions

Figure 2-1 The Sales Force Decision Sequence

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

Distinct competencies Resources

Marketing Financial
Strategic Management
Financial R&D
Planning
Technology Personnel
Information Brand Equity
Production

Firm’s history
management culture

Figure 2-2: Factors Influencing Strategic Management

 Corporate goals
Maximize shareholder wealth

Business unit objectives

12% revenue growth
Grow pre-tax profits by 18%

Marketing objectives
Increase product A’s market share by 2 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 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

Major account objective

Achieve sales revenues of $95,000 in product A
Obtain an average gross margin of 80%

Figure 2-3: Hierarchy of Sales Objectives

 What Goals are Most Important to You?

70
66.1%
60

50

40

29.8% 31.9%
30

20
14.0%
7.7% 7.8%
10

0
Building Enhancing Increasing Investor Saving Other
Brand of credibility sales/ relations costs
Company/ of company revenue
product product
How Successful Were You at Reaching Your Goals?
100
94% 93%
83%
80
68% 72%

60
58%

42%
40
32%
28%

20
17%
6% 7%
0
Building Enhancing Increasing Investor Saving Other
Brand of credibility sales/ relations costs
Company/ of company revenue
product product
Low Cost Strategy:
Vigorous pursuit of cost reductions from
experience and tight cost control.
Differentiation strategy:
Creating an offering perceived as being
unique leading to high brand loyalty and
low price sensitivity.
Niche Strategy:
Servicing a target market very well,
focusing all decisions with the target
market needs in mind, dominating sales
with the segment.
Figure 2-4: Business Strategies and High Profit Sales Force Programs
High Profit Sales Programs:
 Extensive use of independent sales agents
 Focused on transactional customer
relationships
 Structured so that managers supervised a
large number of salespeople
 Compensation was largely incentive based
 Salespeople were evaluated primarily on their
sales outcome performance
High Profit Sales Programs:
 Selective use of independent sales agents
 Focused on long-term customer relationships
 Structured so that managers intensely
supervised a limited number of salespeople
 Compensation was largely salary based
 Salespeople were evaluated on their behaviors
as well as their outcomes.
High Profit Sales Programs:
Experts in the operations and opportunities
associated with a target market. Otherwise the
firm adopted the program characteristics
associated with the appropriate value creation
strategy above.
Sales Force Ranking and Sales Growth:
Pharmaceuticals (1988-1990)

10%

8%

6%
Growth
4%

2%

0%
5 6 7 8

Low High
Sales Force Ranking
Sales Force Ranking and Sales Growth:
Computers (1988-1990)

15%

10%

Growth
5%

0%
5 6 7 8

Low High
Sales Force Ranking
Steps in Developing a Go-to-Market Strategy

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

Post-Purchase Pre-Purchase

Purchase
A Framework for Defining Essential Activities

Customer Size
and
Opportunity
Account Maintenance: Effectiveness Selling:
Continue high-quality service Solve and consult
Electronic Data Entry (EDI) Cooperation
Large Prompt delivery Customization
Enhance value proposition Integration
Relationships Partnership
Friendship

Efficiency Selling: Targeted Selling:

Small
Take orders Quick needs assessment and solution
Secure distribution Explain features and benefits
Consider self-ordering (lower price) Economic evaluation

Buying Low Information, High Information,

Process Low Solution Needs High Solution Needs
 Figure 2-7 Potential Go-to-Market Participants

Customers and Prospects

Agents Advertising
Direct Sales Tele-
Distributors Integrators Alliances Promotion Internet
Force marketing
Retailers Direct Mail

Direct Indirect

Sales Force Options Non-Sales Force Options

Company
Figure 2-8 Comparing Various Go-to-Market Alternatives

Low Cost
per Exposure Advertising

Direct Mail

Internet
Efficiency
Telemarketing

Sales Force

High Sales
Effectiveness
per Exposure
Go-to-Market Strategy: A Large Computer Manufacturer

Direct Sales Force Telemarketing Partners Internet

Industry Inbound Outbound

Teams

Account Geographic
Teams Sales Force

Customer Base
Go-to-Market Strategy: A Large Chemical Company

Direct Sales Force Telemarketing

Account Inbound
Teams

Customer Base
Go-to-Market Strategy: A Pharmaceutical Company

Direct Sales Force Telemarketing Partners

Account Geographic Inbound

Teams Sales Force

Customer Base
 Go-to-Market Strategy: An Industrial Distributor

Direct Sales Force Telemarketing Internet

Inbound Outbound

Account Geographic
Teams Sales Force

Customer Base
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

Launching new and redesigned offerings

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

Managing product installation and maintenance

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

Cross-selling and upselling of offerings

 Three Steps in Leveraging the Customer Base
• From P&L to balance sheet: Customers viewed as assets
Shareholder Value • CRM;s Task: To increase shareholder value by
Driver of Cash Flow leveraging the customer base.
& EVA • Focus on understanding cash flow effects and risk
management

• CRM integrated in the business process and yearly

Business planning process
Driver of Profits • Improving the profitability of customers seen as a driver
of business profit
• Focus on customer selection

• CRM viewed as a tool to achieve a bigger customer share

through cross-selling and up-selling
Sales • Typical in multi-product, multi-divisional environments
Driver of Revenue • Focus on account planning and organizational alignment
Figure 2-12 Sales Force Program
Marketing
MarketingObjectives,
Objectives,Strategy,
Strategy,and
and
Strategy Implementation Program
Strategy Implementation Program

Estimates
Estimatesofofsales
sales
potential
potentialand
and Account
AccountRelationship
RelationshipStrategy
Strategy
sales forecast
sales forecast

Desired
DesiredSelling
SellingActions
Actions
and Behaviors
and Behaviors

Estimates
Estimatesofofsales
salesforce
force Organizational
OrganizationalStructure
Structure
size and budget
size and budget

Competency
CompetencyDevelopment
DevelopmentProgram
Program

Leadership
LeadershipSystem
System
Feedback
 Sales Force Program Elements – Cont.

• How long is the selling cycle?

Account • How much time is spent on customer need discovery?
Relationship • Will the offering be customized for each customer?
Strategy • 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?

• What are their non-selling responsibilities?

Sales Force • How much customer face-time will salespeople have?
Selling • How will sales leads be generated?
Activities • 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.

• Will the sales force be specialized by product,

Organizational customer, or function?
Structure • 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?

Competency • Experience level of new salespeople?

Development • Length and purpose of initial training program?
Program • Nature of continuing development program?
 Sales Force Program Elements – Cont.

Leadership • Mix of salary, bonus, and commission compensation?

Program • 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

Figure 2-13: Alternative Types of Account Relationships

 Different Sales Orientations

Product Sales Solution Sales Value Sales

Sales Best products Solutions to your needs Impact on your
Argument business results

Profile of “Product Expert” “Solution provider” “business consultant”

Sales

Customer Narrow Space Function/ department All levels

Contacts (e.g., purchasing)

Best products with a Product and service Valuable solutions to

Offering solutions to customer needs support competitive advantage
competitive price

Success Product excellence and/ Understanding the Driving customer

or cost leadership customer’s needs profits and EVA
Factors
Figure 2-14: Changes in Customer Expectations of Suppliers
Traditional Relationships
 Little recognition of credit for past
performance
 No responsibility for supplier’s profit
margins
 Little support for feedback from
suppliers
 No guarantee of business
relationship beyond the contract.
 No Performance expectations
beyond the contract.
 Adversarial, zero-sum game.
Enterprise Relationships
 Recognition of past performance
and track record.
 Recognition of suppliers’ need to
make a fair profit
 Feedback from suppliers
encouraged.
 Expectations of business
relationship beyond the contract.
 Considerable performance
expectations beyond the contract.
 Cooperative and trusting, positive-
sum game.
 Good Fair
27% 10%

Very
Good
Poor
10%
53%

Partnering Effectiveness Index