Part II

SALES FORCE ACTIVITIES

Chapter 3:
Sales Opportunity
Management
Sales Opportunity Management

Generating Managing Sales Personal

New Existing Versus Time
Accounts Accounts Profits Management
What Creates
Satisfied Customers?
Mergers and
Acquisitions

10%
33% Acquiring
Introducing New Customers
15%
New Products

42%

Increasing
Business with
Existing Customers

Figure 3-1: What’s the Best Way to Grow?

Prospect Profile

Disposable Medical Supply Distributor

 Multiple-practice physician office
 Internal medicine, family practice
 Suburban location
 New practice -- less than 5 years
 Good credit history
 Currently purchases from a full-service
distributor
Siebel Systems, Inc.:
Opportunity Assessment

Is There an Opportunity?
1 Customer’s Application or Project
2 Customer’s Business Profile
3 Customer’s Financial Condition
4 Access to Funds
5 Compelling Event
Developing a Prospect List

1. Direct Inquiry
Advertising
Direct Mail
Trade publications
Trade shows
2. Directories – Thomas Register
3. Referrals
4. Cold Canvassing
Qualifying Prospects

1. Needs for your products/services

2. Authority to make purchase
3. Credit rating & ability to pay
4. Rating scale applied to characteristics
by each salesperson
Siebel Systems, Inc.:
Assessing the Opportunity

Is There an Opportunity? Can We Compete?

1 Customer’s Application or Project 6 Formal Decision Criteria

2 Customer’s Business Profile 7 Solution Fit

3 Customer’s Financial Condition 8 Sales Resource Requirements

4 Access to Funds 9 Current Relationship
5 Compelling Event 10 Unique Business Value

Can We Win? Is it Worth Winning?

11 Inside Support 16 Short-Term Revenue

12 Executive Credibility 17 Future Revenue

13 Cultural Compatibility 18 Profitability

14 Informal Decision Criteria 19 Degree of Risk

15 Political Alignment 20 Strategic Value

Table 3-1 Computing the Cost per Call for an Industrial Products Salesperson
Compensation
Salary, commissions, and bonus $69,035
Fringe benefits (hospital, life insurance, social security) $10,985 $80,020
Direct Selling Expenses
Automobile 8,000
Lodging and meals 6,250
Entertainment 3,250
Communications 4,500
Samples, promotional material 1,750
Miscellaneous 1,700 25,450
Total Direct Expenses $105,470
Calls Per Year
Total available days 260 days
Less:
Vacation 10 days
Holidays 10 days
Sickness 5 days
Meetings 18 days
Training 12 days 55 days
Net Selling Days 205 days
Average calls per day 3 calls
Total Calls per Year (205 X 3) 615 Calls
Average Cost per Call ($105,470/615) $171.50
Sales Opportunity Management
Key to Productivity

Breakeven Sales Volume

(Cost per Call) x (Number of Calls to Close)

Sales Calls as a % of Sales
How Dell Achieves Selling Efficiencies
Traditional Model Internet Model
100,000 100,000
100,000
100,000
Catalog Website
WebsiteVisits
CatalogDrops
Drops Visits

5,000
5,000
10,000
10,000 Calls
Calls
Calls
Calls

2,000
2,000 500
500 1,750
1,750
Orders
Orders E-Orders
E-Orders Orders
Orders
Sales Opportunity Management
Selected Break-Even Results

Industry Breakeven
Business Services 1,096.37
Chemicals 15,474.67
Construction 9,730.00
Electronics 433.25
Food Products 6,580.00
Instruments 11,629.13
Machinery 1,580.77
Office Equipment 616.67
Printing/Publishing 3,811.61
Rubber/Plastics 41,662.14
Customer Break-Even Analysis

Average Sales Volume Per Month

$9,784

$8,153

$6,522 C
$4,891

$3,261
A
$1,630
B
1 2 3 4 5 6
Number of Sales
Calls Per Month
 Table 3-3: ABC Account Classification

No. of Total Sales Total Total calls Sales ($)

Account Accts. Accts. (000) Sales Per Classif. Per Call
Classification (1) (2) (3) (4) (5) (6)

A 21 15% $910 65% 105 $8,667

B 28 20 280 20 140 2,000
C 91 65 210 15 455 462
Totals 140 100% $1,400 100% 700 $2,000
(Avg)
Table 3-2
Selected Statistics on Cost per Call and
Number of Calls Needed to Close a Sale
Sales Costs as a
Number of
Cost Calls Needed Percentage of
Industry per Call to Close a Sale Total Sales
Business Services $ 46.00 4.6 10.3%
Chemicals 165.80 2.8 3.4
Construction 111.20 2.8 7.2
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 Equipment 25.00 3.7 2.4
Printing/Publishing 70.10 4.5 22.2
Rubber/Plastic 248.20 4.7 3.6
 Figure 3-2: PortfolioModel

Competitive Position
Strong Weak
Core
Core Growth
Growth
Accounts Accounts
Account Opportunity

Accounts Accounts
High Accounts
Accountsarearevery
very Accounts
Accountsare
arepotentially
potentially
attractive.
attractive. attractive.
attractive.
Invest
Investheavily
heavilyininselling
selling May
Maywant
wanttotoinvest
invest
resources.
resources. in heavily
in heavily
Drag
Drag Problem
Problem
Accounts
Accounts Accounts
Accounts
Low Accounts
Accountsare
aremoderately
moderately Accounts
Accountsarearevery
very
attractive.
attractive. unattractive.
unattractive.
Invest
Invest enough to maintain Minimalinvestment
enough to maintain Minimal investment
current position.
current position. of selling resources.
of selling resources.
 $20,000
Dollar Sales per Quarter

$10,000

1 2 3 4 5 6
Number of Sales Calls Per Quarter

Figure 3-3: Number of Sales Calls Response Function

 24 19 17
Unqualified 20 16 14
15 23
13 21 22 18

12 11 50% closure
9 probability
10
Qualified
7 5 75% closure
probability
8 6

3 4 90% closure
Best few probability
1 2

Figure 3-4: The Sales Funnel

Figure 3-5: How Salespeople Spend Their Time

Service
Calls
Selling
Administrative 13% Face-to-Face
Tasks
29%
16%

25%
17% Selling over
the phone
Waiting and
Travel
 Importance
High Low

High Emergencies Time

Time
Emergencies
Urgency

Wasters
Wasters

Low Personal
Personal Recreation
Growth Recreation
Growth

Figure 3-6: Time Management

When Systematic Biases
Are Likely to Exist
Source of Bias Salespeople Who… Are More Likely To
Customer Have low-sales potential, Spend too much time with them.
demanding customers

Have customers with high Focus on customers whose needs

service needs or needs that they can easily meet on their
the salesperson can’t meet own.
on his or her own

Company Have territories with too Have low penetration or share as

many high-sales potential a result of poor coverage.
accounts

Have little information Spend their effort where the

about the potential of current sales are highest.
different accounts

Have very little cash Expend too little energy

compensation at risk in the customizing sales actions for
incentive plan individual customers.
When Systematic Biases
Are Likely to Exist (cont.)

Source of Bias Salespeople Who… Are More Likely To

Sales Are managed by the Spend too much time with
number of calls they make friendly customers irrespective of
Manager potential.
Are left alone to decide Have high variability in the
what to do quality of precision selling

Salesperson Have difficulty handling Shy away from difficult accounts.

rejection and customer
objections

Are making good progress Seek the high-probability, low

toward making quota volume account.

Have made quota relatively Seek the low-probability, high

early in the period volume account.
Time Allocation

 As a salesperson for Strength Footwear, Inc., you have

been very successful.
 Your commissions are well over $70,000 a year.
Demand for your product line is very strong, but so is
the demand on your time.
 You work your territory 220 days a year and can make 4
calls a day. The maximum number of times you need to
see any account is every other week, but you need to
call on each account at least once a quarter.
 To help you allocate your time according to sales
results, you have gathered the following information on
customer sales:
Time Allocation: Customer Sales

Strength Footwear, Inc.

 Develop and
Accounts Sales Last Year justify a call
Top 10 $150,000 schedule for
allocating time
Next 10 best 56,250 across the 110
Next 10 best 55,500 customers in
your territory.
Next 20 best 37,500

Next 20 best 37,500  What additional

information
Next 20 best 18,750
should you
Last 20 15,000 consider in
$370,000
allocating your
time?
Time Allocation Analysis
Number of Total Sales Percent Percent Sales per Account
Accounts Volume of Sales of Account
10 $150,000 40.5% 9% $15,000
10 56,250 15.2 9 5,625
10 55,500 15.0 9 5,550
20 37,500 10.1 18 1,875
20 37,000 10.0 18 1,850
20 18,750 5.1 18 938
20 15,000 4.1 18 750
110 $370,000 100.0% 99% $ 3,364

Total Number Percent Sales

Accounts Call Pattern of Calls Of Calls Per Call
Top 10 Every other week 260 29.6% $576.92
Next 10 Once a month 120 13.6 468.75
Next 10 Once a month 120 23.6 462.50
Next 20 About every 2 mos. 110 12.5 340.91
Next 20 About every 2 mos. 110 12.5 336.36
Next 20 Once a quarter 80 9.1 234.38
Last 20 Once a quarter 80 9.1 187.50
880 100.0% $420.45