SALES AND DISTRIBUTION ASSIGNMENT -1

HEWLETT PACKARD – Computer systems

organization: Selling to enterprise Customers
Timeline of the case

Now
1996

Company takes the help of a consulting

1992 firm to solve the problem
Sales were low in middle and down
stream segment. Company is looking to
reduce costs in sale and support
1980
Company had an enormous success.
They are looking for new sales
approach

1939 Company witnesses robust sales and long

life cycles. Prices are a bit high because
of strong product features

Started in this year by 2 Stanford

engineers, Bill Hewlett & Dave
Packard, to design world’s first oscillator
Case facts
• The selling costs of HP are higher than the industry average

• Also the compensation plan is short term

• There was an increasing pressure on the representative who are not effectively monitoring the
process

• The sales force are just order takers rather than business developers

• The costs should be greatly reduced

• The cost reduction of the products should not hamper the brand equity
The Sales Process Audit
Customer-in perspective Identification of potential
on the purchasing process breakthrough paths at the
and buying values of HP’s field and headquarters
enterprise levels

Stage 1 Stage 2 Stage 3 Stage 4

Initiation of both fast-

Accurate documentation start and long term
of the sales processes productivity improvement
currently executed by HP’s actions by the sales teams
sales force and analysis of involved in the study
the productivity
1. Is this the time for HP-CSO
to institute more changes?
1) Answer

• The current sales strategy and sales process of HP did not optimize the total sales opportunity
from the customers perspective

• They need to priorities the accounts and form a support team specialized on understanding the
accounts which will reduce the wasted time

• The Sales representatives require a revised training and remuneration program to improve
motivation to achieve the sales target and improve the conversion rate

• The salesforce should be trained to be able to approach bigger clients instead of just restricting it
to mid level and low level enterprises and give more specifications about the procedure to follow

• According to Pareto’s principle, the top 5% customers constitute to 40% revenues, Hence it should
focus on various clients to diversify the risk
2. How is selling instruments (HP’s traditional business)
different from selling consumer systems? Why does HP
treat its sales force as a cost centre? What are the
implications of such a structure?
 SELLING INSTRUMENTS
DIFFERENT FROM SELLING
CONSUMER SYSTEMS
• Initially HP marketed its products on the basis of
technological features but now it also offers
services related to their instruments.
• Computer systems are highly customized as per the
requirements of many customers whose specific
challenges are resolved but some standard
solutions are also available that can be used by
these same customers.
• Informing customers about the systems make them
solve the potential problems on their own.
• But an instrument is different in such a way that
here HP is the only one who has the technical
knowledge to repair if it breaks down and the
customer is highly dependent on these technical
capabilities that lies with HP.
• Here organizations like HP need to manage
resources and strategize their allocation as per the
mix of different units in multiple businesses.
• HP was divided into 3 divisions
where each division got its own IMPLICATIONS
sales team and these divisions
were treated as revenue centres.
These divisions had responsibility
of field marketing and customer
service. These divisions had
different objectives where one
division for merchandise was
interested in long term profits
and the other division in field was
interested in short term sales
objectives.
• As a result of this cost centre • The implications
culture imbibed by HP, the sales are that this sales
team was trying to get as many related nature of
orders as possible and were not the business does
looking towards adding value to not encourage
business. customers for
long term
partnership.
TREAT AS COST CENTER
Ques 3: HP CSO’S approach to build relationships with enterprise
customers & its strengths and weaknesses

Enterprise customers Targeted Approach Targeted Approach

• To capitalise on new • Targeting financial

• Account for 40%of sales
market position, sales services and supply
at HP
force team needed to be chain companies such as
• Make the top 5% of the
redesigned retail, gas, etc.
customers base
• Targeting specific • Government and
• HP sales representative
industries and assigning manufacturing
direct sales dealing
sales persons as per the industries
• Large volume of daily
industries • Telecommunications,
orders
media and utilities

This enterprise customer base calls for customization at the company’s end for the
customer orders; which calls for transforming sales people into consultants
 STRENGTHS WEAKNESS

• Customization involves efficiency and

• Building long-term relationships with
optimization
enterprise customers
• Sales person might be resistant to change
• Using Domain-specific approach to generate
and this may lose the customers over some
more sales because of over-specialization of
territories
sales force
• Sales people relationship critical to the
• Installing barrier to the competitor by
business
serving values to the customers
• Re-emphasis on training programs for the
• Customization of offerings adds value to the
sales person to elevate their role to
business
consultants
• Additional duty performed by sales person
• Customers handle any type of queries to
• Increasing efficiency and saving money
sales persons
4. Do you agree with the findings of the two audits? What
about the consultant’s recommendations? How is the new
approach different from HP-CSO’s current approach to
managing the enterprise
4) Answer
We agree with the findings of the first
audit and not the second.
The recommendations of consultant
are not structured properly but it is a
case and not a complete report so it is
understandable.
Reason:
1. The customer was important for HP and
had good relations with the firm.
2. Industry of the customer was a strong
point of HP.
3. Only one region was selected for the
study.
However they provide great insights
especially the innovation projects section and
the section on repurchase, replacement and
expansion.
But consultant does not have a strong plan to
materialize it well.
4) Answer

- It will get the desired result only when

the sales force gets proper training on the
changes.
New approach to managing enterprise
- The barriers to competition would make
customer
it difficult and time consuming for HP to
reach the top
- The new method is both time consuming
and risky.
5. Are you comfortable with the
conclusions of the audit? What are your
recommendations to Diaz?
5) Answer

• No, we are not satisfied with conclusions of the Audit. Some recommendations are:

• Need to increase conversion rate of downstream & midstream segment

• They need to develop competence in midstream & especially upstream segment of the market to
capture the true potential market share for HP-CSO

• Value proposition should be in line to target the upstream market. .

• Reduce the time drain of Sales Representative

Thank You