Part I THE BIG PICTURE

1. Part ITHE BIG PICTURE Chapter 2: Strategy and Sales Program Planning

2. The natural progression How to make sales force and sales program decision

3. Customer Relationship Management (CRM) Go-to-Market Strategy LEVEL 2 Strategy Implementation Decisions Product Development Management (PDM) Supply Chain Management (SCM) Activities Structure LEVEL 3 Sales Force Program Decisions Account Relationship Strategy Competencies Leadership LEVEL 1 Top Management Decisions Business Strategy Marketing Strategy Figure 2-1 The Sales Force Decision Sequence

4. Business Strategy

5. Environmental constraints Legal & regulatory Demographics Economic Conditions Technology Competitive conditions Sociocultural factors Resources Financial R&D Personnel Brand Equity Production Distinct competencies Marketing Financial Technology Information Firm’s history management culture Figure 2-2: Factors Influencing Strategic Management Strategic Management Planning

6. Marketing Strategy

7. 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 Figure 2-3: Hierarchy of Sales Objectives Major account objective Achieve sales revenues of $95,000 in product A Obtain an average gross margin of 80%

8. A Look into What Companies Want . . . .

9. What Goals are Most Important to You? 66.1% 31.9% 29.8% 14.0% 7.8% 7.7% 70 60 50 40 30 20 10 0 Building Brand of Company/ product Enhancing credibility of company product Increasing sales/ revenue Investor relations Saving costs Other

10. How Successful Were You at Reaching Your Goals? 42% 32% 28% 17% 6% 7% 100 94% 93% 83% 80 72% 68% 58% 60 40 20 0 Building Brand of Company/ product Enhancing credibility of company product Increasing sales/ revenue Investor relations Saving costs Other

11. Types of Strategies (Generic) and Their Effect on Sales Programs

13. Secure Added Distribution Call on targeted current customers Call on most profitable accounts only Eliminate services Reduce overall service levels Add new customers Offer exceptional pricing Provide high presale services Reduce inventory levels Focus on one time sales Increase service to current customers Maintain distribution Provide product & market feedback Minimize time commitment Call on targeted new customers Invest as little time as necessary Focus on volume growth Focus on account penetration Build current relationships Build Strategy Expand market share in a high-growth market Hold Strategy Maintain market share at the lowest costs possible Harvest Strategy Reduce costs and focus on profit, not market share Harvest Divest Strategy Reduce inventory at lowest cost possible Marketing Strategies Divest Sales Strategies Figure 2-4: Business Portfolio Analysis and Sales Force Strategy

14. Sales Force Ranking and Sales Growth: Pharmaceuticals (1988-1990) Growth Low High Sales Force Ranking

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

16. A More Detailed Look at Marketing Strategy • The Three Major Functions of Marketing: • Segmentation • Targeting • Positioning

17. Strategic Implementation Decisions

18. Steps in Developing a Go-to-Market Strategy • What is the best way to segment the market? • What are the essential activities required by each segment? • What group of go-to-market participants should perform the essential activities? • Which face-to-face selling participants should be used?

19. Post-Purchase Pre-Purchase Purchase Figure 2-6 Essential Activities Interest Creation

20. A Framework for Defining Essential Activities Customer Size and Opportunity Large Small Buying Process Low Information, Low Solution Needs High Information, High Solution Needs

21. Direct Sales Force Agents Distributors Retailers Integrators Alliances Advertising Promotion Direct Mail Tele- marketing Internet Non-Sales Force Options Sales Force Options Direct Indirect Figure 2-7 Potential Go-to-Market Participants Customers and Prospects Company

22. Advertising Direct Mail Internet Telemarketing Figure 2-8 Comparing Various Go-to-Market Alternatives Low Cost per Exposure Efficiency Sales Force High Sales per Exposure Effectiveness

23. Partners Direct Sales Force Telemarketing Industry Teams Inbound Outbound Internet Geographic Sales Force Account Teams Go-to-Market Strategy: A Large Computer Manufacturer Customer Base

24. Telemarketing Direct Sales Force Inbound Account Teams Go-to-Market Strategy: A Large Chemical Company Customer Base

25. Partners Telemarketing Direct Sales Force Inbound Geographic Sales Force Account Teams Go-to-Market Strategy: A Pharmaceutical Company Customer Base

26. Direct Sales Force Telemarketing Inbound Outbound Internet Account Teams Geographic Sales Force Go-to-Market Strategy: An Industrial Distributor Customer Base

27. 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

28. 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

29. 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

30. From P&L to balance sheet: Customers viewed as assets • CRM;s Task: To increase shareholder value by leveraging the customer base. • Focus on understanding cash flow effects and risk management Shareholder Value Driver of Cash Flow & EVA • CRM integrated in the business process and yearly planning process • Improving the profitability of customers seen as a driver of business profit • Focus on customer selection Business Driver of Profits • CRM viewed as a tool to achieve a bigger customer share through cross-selling and up-selling • Typical in multi-product, multi-divisional environments • Focus on account planning and organizational alignment Sales Driver of Revenue Three Steps in Leveraging the Customer Base

32. Sales Force Program Elements – Cont. • How long is the selling cycle? • How much time is spent on customer need discovery? • Will the offering be customized for each customer? • 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? Account Relationship Strategy • What are their non-selling responsibilities? • How much customer face-time will salespeople have? • How will sales leads be generated? • 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 Selling Activities

33. Sales Force Program Elements – Cont. • Will the sales force be specialized by product, customer, or function? • 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? Organizational Structure Competency Development Program • Experience level of new salespeople? • Length and purpose of initial training program? • Nature of continuing development program?

34. Sales Force Program Elements – Cont. • Mix of salary, bonus, and commission compensation? • 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? Leadership Program

35. Enterprise Relationship Investment by Supplier Consultative Relationship Transactional Relationship Investment by Customer Figure 2-13: Alternative Types of Account Relationships

36. Solution Sales Value Sales Solutions to your needs Impact on your business results Best products “business consultant” “Solution provider” “Product Expert” Function/ department Narrow Space (e.g., purchasing) All levels Best products with a competitive price Product and service solutions to customer needs Valuable solutions to support competitive advantage Product excellence and/ or cost leadership Understanding the customer’s needs Driving customer profits and EVA Different Sales Orientations Product Sales Sales Argument Profile of Sales Customer Contacts Offering Success Factors

37. Figure 2-14:Changes in Customer Expectations of Suppliers

38. Partnering Effectiveness Index