Part II SALES FORCE ACTIVITIES Chapter 3 Sales

Part II SALES FORCE ACTIVITIES Chapter 3: Sales Opportunity Management

Sales Opportunity Management Generating New Accounts Managing Existing Accounts Sales Versus Profits Personal Time Management

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

Table 3 -1 Computing the Cost per Call for an Industrial Products Salesperson Compensation Salary, commissions, and bonus Fringe benefits (hospital, life insurance, social security) $69, 035 $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 Total Direct Expenses 25, 450 $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 Net Selling Days Average calls per day Total Calls per Year (205 X 3) Average Cost per Call ($105, 470/615) 55 days 205 days 3 calls 615 Calls $171. 50

Table 3 -2 Sales Force Costs Across Selected Industries Industry Sales Force Costs as A Percentage of Sales ------------------------------------------------Banking 0. 9% Business services 10. 5 Chemicals 3. 4 Communications 9. 9 Construction 7. 1 Electronic components 4. 9 Electronics 12. 6 Fabricated metals 7. 2 Food products 2. 7 Instruments 14. 8 Machinery 11. 3 Manufacturing 6. 6 Office equipment 2. 4 Paper/allied products 8. 2 Pharmaceuticals 5. 6 Printing/publishing 22. 2 Rubber/plastics 3. 6 Wholesale (consumer) 11. 2

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 100, 000 Catalog Drops Internet Model 100, 000 Website Visits 5, 000 Calls 10, 000 Calls 2, 000 Orders 500 E-Orders 1, 750 Orders

Table 3 -3: ABC Account Classification A B C Totals No. of Total Sales Accts. (000) (1) (2) (3) 21 28 91 140 Total Sales (4) 15% $910 65% 20 280 20 65 210 15 100% $1, 400 100% Total calls Per Classif. (5) Sales ($) Per Call (6) 105 140 455 700 $8, 667 2, 000 462 $2, 000

Figure 3 -1: Portfolio Model Account Opportunity Competitive Position Weak Strong High Low Core Accounts Growth Accounts are very Accounts are potentially attractive. Invest heavily in selling May want to invest resources. in heavily Drag Accounts Problem Accounts are moderately attractive. Invest enough to maintain current position. Accounts are very unattractive. Minimal investment of selling resources.

Dollar Sales per Quarter $20, 000 $10, 000 1 2 3 4 5 6 Number of Sales Calls Per Quarter Figure 3 -2: Number of Sales Calls Response Function

Unqualified 13 24 19 20 21 15 17 23 16 22 12 9 14 18 11 10 50% closure probability Qualified 7 5 6 8 Best few 3 1 4 2 Figure 3 -3: The Sales Funnel 75% closure probability 90% closure probability

Figure 3 -4: How Salespeople Spend Their Time Service Calls Administrative Tasks Waiting and Travel Selling Face-to-Face Selling over the phone

Urgency High Importance High Emergencies Low Personal Growth Low Time Wasters Recreation Figure 3 -5: Time Management