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STRATEGIC SALES MANAGEMENT
The world of selling must
accommodate a dramatically
changed world of buying
Territory Analysis
Why Do It?– To obtain thorough coverage of the market– To establish territory responsibilities– To evaluate Performance– To improve customer relations– To reduce cost/increase profitability– To allow better salesforce/customer
matching
Target Account Strategy
Undifferentiated Account Approach
TARGETACCOUNTS
SALESSTRATEGY
Target Account Strategy
Account Segmentation Approach– Key Account– Profitability– Size– Potential
SALESSTRATEGY
Account1
Account2
Account3
Account4
Expected Value Analysis
Determination of product potential on an account by account basis.
Estimates of Market Share and Probability are based upon the judgement of the salesperson and– Amount of past sales– Degree and kind of competition– Product,Price, and Service commitments– Economic conditions– Existing account relationships
Expected Value of an Account
EV= PPV x (SES x PES)
– EV=Expected value– PPV= Potential Product Volume– SES= Salesperson Estimated Share– PES= Probability of getting expected share
Account SES PES ExpectedShare-%
A 30% .2 6%
B 40% .4 16%
C 50% .3 15%
D 60% .1 6%
43%
Expected Value
EV=PPV X Expected Share
– $60,000 X .43 = $25,800
Sales Force Quality Impacts Financial Performance
Value of Quality Sales Force Increases as:– Customer pressure intensify– Sources of Product differentiation dry up– Supply Chain Functions become more
integrated
Sales Strategy is most important when
Product is differentiated
Product is New Product is late
in life cycle Product is
undifferentiated
Amount of Product DifferentiationProduct Life Cycle
High Low
High
Low
From Product Power to Customer Power
Over time sources of of MFG. Profitability change – Early one profits are proportional to
account size Consolidation in most customer
industries has led to much more concentration at the top of the account triangle
Shift in customer buying power requires shift in Sales Strategy
Number of Accounts
Cost Pressure
Price Pressure
Major Accounts
MiddleAccounts
Mini-Accounts
Key Determinants of Account Profitability
Account Retention Account Dominance Realized Price Selling and Service Cost Account Selection
Something Old…Something New
Get New Accounts Get the Order Pressure Firm to cut
Price Give Service to Get
Sales Manage all accounts
the same way Sell to Anyone
Retain Existing Accounts Become the Preferred
Supplier Price for Profit Manage for Profitability Manage each account for
maximum long term profitability
Concentrate on High Profit Potential accounts
Role of the Salesperson
Which Accounts? Which Products and Services? What Specific Activities are to be
accomplished? What are the key interactions with other
parts of the company?
Make the Sales Task Clear
ProductA
ProductB
ProductC
AccountType 1
Task A1 Task B1 Task C1
AccountType 2
Task B2
AccountType 3
Task C3
Sales Force Architecture
How many different sales forces should we have?
How should the sales force be structured?
What degree of specialization is needed?
What are the sales force resource requirements?
Sales Management must function as a system
Measurement Systems
Skill Creation Systems
Motivation Systems
Management Systems
Rethinking The Role of the Sales Force
Return on Investment Sales Process Control Integrated Customer Management Technology Assisted Selling Performance Management
20
Direct versus Indirect Salesforce
Internal costexceeds market cost
Marketcostexceedsinternal cost
Governancecost difference
Total cost differenceProduction/distribution and governance
Production/distribution cost difference
Market preferred Integration preferred
Asset specificity
Critical point
SituationAnalysis
Economiesof addingValue
GovernanceCost ofChannel Managment
Delegationof ChannelFunctions
Pricing
Communicate
Service
Distribution
Customize
Collecting
Research
* Understanding Customer Need Requirements * Establishing Channel Objectives* Direct versus Indirect Channel Alternatives* Economic Consequences* Evaluating Channel Performance
KEY CHANNEL MANAGERIAL ISSUES
Multiple Customer Bases Create Complex Interactions
WHO IS THE CUSTOMER?
SUPPLIER
DISTRIBUTIONCHANNEL A
DISTRIBUTION CHANNEL B
INDIVIDUALCUSTOMER
INDUSTRIALCUSTOMER
Growth in Multi-channel Systems
Selling Costs Just in Time Inventory Management Supply Chain Systems Information Technology
Channels Members add Value to the Exchange Process
SuppliersLocal market KnowledgeLocal inventory and distribution outletsExchange efficienciesFinancial Services
CustomersExpert adviceCreditAccessibilityWarranty/ Guarantees
Control vs. Financial Resources in Channel Design
Financial Suppliers
Resources Control
More Financial ResourcesRequired and more control
Less Financial ResourcesRequired and more control
Few
Many
High
LOW
Distributors Economic Role
Manufacturer Distributor Customer
Transferred Business
Costs
Transferred Business
Costs
$ Inventory$ Order Handling$ Selling$Credit
$ Inventory$Freight$Storage$Order Handling
Distribution Strategies
Intensive DistributionNewspapers,Books, magazinesPackaged goodsAuto parts
Selective DistributionConsumer DurablesSevices
Exclusive DistributionRolls royce Dealers
Manufacturers Representatives
Independent firmBears all selling expensesSells on commission basisDoes not carry competing linesReplaces or supplements the direct sales forceDoes not take title to the goods
Distributors Beliefs about Factors
High cost of carrying inventoryInefficient marketing CostsIncreasing distribution costsPressure to increase volume and market shareIncreased distributor services.Lower operating costs of purchasing.
Internal costexceeds market cost
Marketcostexceedsinternal cost
Governancecost difference
Total cost differenceProduction/distribution and governance
Production/distribution cost difference
Market preferred Integration preferred
Asset specificity
Critical point
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