S trate g ic Planning
Sales Planning Strategies and Resource
Management
Prepared by Larry Podgorny
Why Plan ?
Alice: Which way should I go?
Cheshire Cat: That depends on where you are going.
Alice: I don’t know where I am going.
Cheshire Cat: Then it doesn’t matter which way you go!!
Lewis Carroll
1872
Through the LookingGlass
The Plan
•
•
•
•
•
In the beginning was the plan.
And then came the assumptions.
And the assumptions were with out form.
And the plan was completely without substance.
And darkness was upon the face of the workers.
De finitio n o f S trate g y /S trate g ic
• A careful plan or method
• The art of devising or employing plans or stratagems
toward a goal
• Of great importance within an integrated whole or to
a planned effect
• Necessary to or important in the initiation, conduct, or
completion of a strategic plan
What S trate g ic Planning is No t
• Strategic planning is not forecasting
• Strategic planning is not the simple application of
quantitative techniques to business planning.
• Strategic planning is concerned with making
decisions today that will affect the organization
(product line) and it’s future.
• Strategic planning does not eliminate risk, it helps
managers access the risks they must take by gaining
a better understanding of the parameters involved in
their decisions.
S implifie d Pro c e s s o f S trate g ic
Planning
The process of strategic planning is a step-by-step
approach three key questions that lie at the heart of
any business strategy:
• What are you going to sell?
• Who are your target customers?
• How can you beat or avoid your competition?
If you can answer these three questions well, you have
a strategy.
S implifie d Pro c e s s o f S trate g ic
Planning (Co nt.)
• There’s no denying that a simplified process involves
complex issues.
• The process involves digesting a lot of information
and requires some fairly difficult analysis.
• Good strategic planning should be simplified not
simplistic.
• Good intentions alone does not get the job done.
S implifie d Pro c e s s o f S trate g ic
Planning (Co nt.)
• You need to see it big at first. Start at a high level.
• Sift through all of the noise to get to the important
details
• The next step is do the things that matter very well.
• Occasionally, go back up to the high level to make
sure everything is still on course.
S implifie d Pro c e s s Of S trate g ic
Planning - S tart By S tudying The Way It
Is No w
• You need to gather basic information and facts
without making any judgments.
• Based on this information you build some
assumptions, again without making judgments.
• This process is the central part of the planning
process and needs to be reviewed in detail because
this information is the foundation for all further
strategy discussions and decisions.
2.
3.
4.
Data
External Situation
Internal Situation
Capabilities and
competencies
2.
Analysis
7.
Strategic assessment
Strategic Issues
6.
2.
2.
3.
4.
Direction
Strategies
Commitment
Mission Statement
Goals
Objectives
Implementation
Action Plans
Budgets
Schedules
Ideas
Assumptions
S implifie d Pro c e s s o f S trate g ic
Planning - Ho w it Wo rks
Planning
•Gather Information
•Assess Capabilities
•Make Assumptions
•Make Strategic Assessments
•Formulate Strategy
•Establish Goals and Objectives
•Formulate Tentative Action Plans
•Finalize Action Plans
Monitor Developments
and
Progress
Execution
Total Organizational Planning
Strategic Planning
Marketing Information
Long Term Business Plan
Market Plan
Shorter Term Business Plan
Sales Plan
Key
Account Strategy
Target
Account Strategy
Maintenance
Account Strategy
Why Bother
Account Strategy
Strategic
Territory Plans
Key and Target Account Plans
Action Plans
Control & Evaluation
Tactical
S tart by S tudying the Way It Is No w
The course to your vision, like all navigation, starts with
a known position.
• What markets should you pursue
• Who are your competitors
• Where is your competitive advantage
• What are your strengths
• What are your weaknesses
Figuring out point A is the first essential step to charting
a course to get to point B. So get your bearings!
Where are you today?
P
O
S
I
T
I
O
N
I
N
G
Which segments /
customers will we
concentrate on ?
CUSTOMER
TARGETS
Whom will we
challenge for these
customers?
COMPETITOR
TARGETS
What incentives will we
provide to get them to
buy from us… rather
than from competitors?
CORE
STRATEGY
DEFINING AND S ELECTING KEY/TARGET
ACCOUNTS
Strong
Weak
High
•
•
•
•
•
ACCOUNT
ATTRACTIVENE
SS
Size
Growth
Profitability
Location
Purchasing criteria
and processes
• Current suppliers
• Status of customer
(prestige)
Low
Invest /
Grow
Maintain
Selectively
Invest
Manage for
Cash /
Withdraw
BUSINESS STRENGTHS
• Product range
• Product efficacy (the power to produce an
effect )
• Service quality (inc. distribution)
• Price
• Associated services (e.g. Tech advice)
• Reputation/image
• Past experience
• Quality of sales staff
ACCOUNT PORTFOLIO ANALYS IS
High
Account
Opportunity
Low
Weak
Strength of Position
Strong
KEY
TARGET
Attractiveness:
Accounts are very attractive since they
offer high opportunity and sales
organization has strong position.
Attractiveness:
Accounts are potentially attractive
since they offer high opportunity, but
sales organization currently has weak
position with accounts.
Sales call strategy:
Accounts should receive a high level of
sales calls since they are the sales
organization’s most attractive
accounts.
Sales call strategy:
Selected accounts should receive a
high level of sales calls to strengthen
the sales organizations position.
MAINTENANCE
WHY BOTHER
Attractiveness:
Accounts are somewhat attractive since
sales organization has strong position,
but future opportunity is limited.
Attractiveness:
Accounts are very unattractive since
they offer low opportunity and sales
organization has weak position.
Sales call strategy:
Accounts should receive a moderate
level of sales calls to maintain the
current strength of the sales
organization’s position. And, efforts
should be made to replace field sales
calls with telephone sales.
Sales call strategy:
Accounts should receive no field sales
calls and a minimum of inside sales
resources.
ACCOUNT S EGMENTATION AND PRIORITIZATION
High
KEY ACCOUNTS
TARGET ACCOUNTS
ACCOUNT ATTRACTIVENESS
(Your competition’s Key Accounts)
• 10-20% of your account base
• Gets very little attention
• 80% of your GP$
• Receives less than 50% of
your resources
MAINTENANCE ACCOUNTS
• 40-45% of your account base
• 10-15% of your GP$
• Receives 30-40% of your
resources
Low
Strong
WHY BOTHER? ACCOUNTS
• 30-40% of your account base
• Less than 5% of your GP$
• Receives 20-30% of your
resources
• Creates 90% of your
“headaches”
YOUR STRENGTH OF POSITION
Weak
Strong
S ale s Te am and S e lling Effo rt
Sales Channel:
Major Account
PROGRAMS
KEY
Sales Channel:
Selling Effort:
Field Selling and
Inside Sales
Sales Channel: Direct Marketing,
Teleselling, and Field
Selling
Selling Effort:
Heavy
MAINTENANCE
Heavy (best prospects)
Low (other prospects)
WHY BOTHER
Sales Channel:
Inside Sales
Field Selling and
Teleselling
Sales Channel: Teleselling,
Direct Marketing,
and Some Inside
Selling Effort:
Moderate
Selling Effort:
Low
Weak
ACCOUNT
OPPORTUNITY
Selling Effort:
Heavy by Specialist
TARGET
Strong
COMPETITIVE POSITION
Weak
Changing Business
Environment
The
Selling
Ballgame
Leads to
Changing Selling
Environment
Resulting in
Harder to Get and
Hold Customers and
It Costs More!
Implications
☛
Better Understanding of
Customer’s Needs
☛
Better Selectivity
☛
Better Selling Strategies
☛
Better Time & Territory
Management
PRIORITIES
Time Management
Your Scarcest Resource
TOTAL BUSINESS DAYS 2002
Less:
• Vacation
• Holidays
• Personal absences
WORKING DAYS AVAILABLE IN YEAR
Less:
• Meetings, Trade Shows, etc.
• Training
• Customer unavailability
• Miscellaneous
TOTAL
252
10
10
5
25
227
Acct. Service/
Coordination
13%
Travel
17%
2001
Face-to-Face
Selling
29%
HOW
S ALES PEOPLE
S PEND THEIR
TIME
Administration
16%
Phone
Selling
25%
Acct. Service/
Coordination
11%
Travel
18%
2000
Face-to-Face
Selling
30%
Administration
16%
Phone
Selling
25%
The Co nte mpo rary Marke ting Co nc e pt
Customer Orientation
The purpose of a business is to satisfy the needs of customers.
Products and services are important only to the extent that they satisfy
these needs—they are means rather than ends. Therefore, marketing
starts with the determination of customer needs and ends with the
repeated satisfaction of those needs.
Profit Orientation
A business must satisfy the needs of its customers at an acceptable
level of profitability. Therefore, the purpose of marketing is not simply
to generate sales or achieve a certain market share, but rather to
produce profitable sales and a profitable market share.
Integrated Effort
All activities or a business should be integrated and coordinated so as
to satisfy customer needs at a satisfactory rate of profitability.
Marketing must be coordinated with finance, production, personnel
administration, engineering, and research and development. Moreover,
all marketing activities must be effectively integrated and coordinated
in order to achieve market impact.
I. Cus to me r Chang e Drive rs
•
Raw material shortages
•
Regulatory agencies
•
Environmental
•
Global competition
•
Trade agreements (NAFTA, GATT)
•
Mergers/acquisitions
•
Automation/technology
•
Reduction in cycle time
•
“Price”
•
“Quality”
•
Down sizing
Cus to me r Chang e Drive rs (c o nt’d .)
•
Reengineering
•
Out-sourcing
•
Systems versus products
•
Out-sourcing of engineering and R&D to vendors
•
Long term contracts (5 years)
•
Sharing of warranty costs by suppliers
•
EDI
•
Vendor reduction
II. Purc has ing Be havio r/Buying Re latio ns hips
•
Manage supply channel
• – strategic alliances
• – partnering
• – customer linked strategies
• – integrated supply
•
National account programs
•
Single source
• – product breadth
• – product depth
•
EDI
•
•
•
– seamless order and delivery
– automation
– paperless
•
Removal / reduction in any redundancy
•
Vendor reduction
Purc has ing Be havio r/Buying Re latio ns hips (cont’d.)
•
Broader offering of “true” value added services
•
Proof of performance—vendor score cards
provided by vendors
•
Vendor as a business consultant to account
•
Problem solving vendors will be chosen
•
Reduction of in-house expertise by customers
•
Require modular / systems, global vendors with
total quality
•
Purchase “packages” of integrated components
(systems) versus single components
•
Better P.O.P. merchandising
III.
Ro le o f the S ale s Te am
•
•
•
•
•
•
•
Increased speed of response
Technical value-added sales calls
Greater knowledge of customer, competition and sellers
company
Ability to make decisions (empowerment)
Relationship selling at higher level—sell the “whole”
customer
Empathy for the customer
Functional sellers
• – sales teams/sellers focused on opening accounts
through “selling” creative solutions to problems
• – account managers on accounts to “service”
IV.
S ale s Fo rc e Is s ue s / Pro ble ms
•
•
•
•
•
•
•
•
•
•
Willingness to change
Different organizational structure, e.g., Hunters and
Farmers
New skills
Sales force automation
Accountability / evaluation / compensation
More specialized sellers required—currently generalists
Total company will become a selling team—cultural
change
Shift paradigm from products to integrated solution
systems
More research at the account level
Sharing of customer information
V.
Chang e Are as
•
International, national account perspectives
•
Better technical skills
•
Better research skills
•
“Understanding”
•
Customer specialized sales forces
Why Do Sales Organizations Become Obsolete?
Growth Evolution
I
II
III
IV
Any business is
good!
All Business
is good!
What business
is good?
Certain business
is good!
One product
One market
One product
One big market
Old/new
products many
markets
Redefine
customer
segment selling
Sell to
survive
Sell volume to
lower costs
Sell volume to
hold share
Optimize to get
best returns
Start-up
Volume
growth
Market share
Optimization
THE
PURPOS E
S ALES FORCE TIME & EFFORT
Customer Resource Allocation
Decisions
Product Resource Allocation
Decisions
Activity Resource
Allocation Decisions
What segment(s) to call on
New vs. existing products
Hunting vs. farming
What volume segments to call
on:
High volume vs. low volume products
Selling vs. servicing
Easy to sell vs. hard to sell products
– High volume vs. low
volume
– Familiar vs. unfamiliar products
Relationship expert
vs. product expert vs.
industry expert vs.
customer expert
– National accounts vs.
smaller accounts
What profitability segments to
call on: highly profitable vs. less
profitable
New vs. existing accounts
High penetration vs. low
penetration accounts
What geography to focus on
Headquarters vs. field calls
– Products with high short-term
impact and low carryovers vs.
products with low short-term
impact and high carryover
– High-tech products vs. low -tech
products
– Long selling cycle vs. short
selling cycle
– Differentiated vs.
non-differentiated
– Highly competitive vs.
noncompetitive
S ELLING PROCES S ES
Where buyers experience
the greatest challenges
EVOLUTION OF
BUYING PROCES S
Selling organizations get involved at
different stages in the customer’s
buying process
Planning
1
Recognizing Searching
2
3
Evaluating Selecting
4
5
Committing Implementing Tracking
6
7
8
VENDOR
“Present-Handle Objections-Close”
SUPPLIER
Searching through implementing
ADDED VALUE PARTNER
Entire process: Planning through tracking results
Where
Sellers
Focus
Efforts
S e lle rs Bo undary Ro le
Communication
Selling
Organization
Communication
REP
Buying
Organization
Marketing Strategy
Procurement Strategy
policies
procedures
programs
policies
procedures
programs
Trans ac tio ns and Re latio ns hips
Transaction Selling
Relationship Creation
1. Selling dominates learning
1. Learning about the customer
is intense and dominates
selling
2. Talking dominates listening
2. Listening dominates talking
3. Persuading the customer is
product driven and benefits
focused
3. Teaching the customer is
need driven and problem
focused
4. The goal is to build buyers
and sales through
persuasion, price, presence
and terms
4. The goal is to build
relationships through
credibility, responsiveness,
and trust
TYPICAL PROCES S
Recognition
of Needs
Help
customers
recognize
and define
problems
and needs
in a new or
different
way.
Evaluation
of Options
Show
superior
solutions,
options, and
approaches
that
customers
may not
have
understood
or
considered.
Resolution
of Concerns
Help
customers
overcome
and remove
obstacles to
acquisition.
Purchase
Make
purchase
painless,
convenient
, and
hasslefree.
Implement
station
Show
customers
how to
install and
use product.
ADDING VALUE TO A TRANS ACTIONAL S ALE
Recognition
of Needs
Evaluation
of Options
Resolution
of Concerns
Customer
has
already
defined
needs and
problems
completely
.
Customer
already
understands
alternative
solutions.
Custome
r has
few
issues
or
concerns
.
Little or no
opportunity
to create
sales
value.
Little or no
opportunity
to create
sales
value.
Little or no
opportunity
to create
sales
value.
Purchase
Seller can
help make
purchase
painless,
convenient
, and
hasslefree.
Little or no
opportunity
to create
sales
value.
Implementstation
Customer
generally
knows
how to
use
product.
ADDING VALUE TO A CONS ULTATIVE S ALE
Recognition
of Needs
Seller can
create
most value
early in
the
process by
helping
customers
define
needs and
solutions.
Evaluation
of Options
Resolution
of Concerns
Consultativ
e seller can
design
customized
solutions
and help
customers
make
informed
choices.
Consultativ
e seller can
counsel
customers
and help
resolve
concerns.
Purchase
Implemen
t-tation
Consultativ
e seller can
advise and
problem
solve
implementa
tion issues.
S ale s Call Time
TYPICAL
SALESPEOPLE
KEY ACCOUNT
SALESPEOPLE
5%
Needs Analysis
50%
10%
Problem Solving
30%
35%
F/B. Presentation
15%
50%
Trying to Close
5%
Buying Dis c ipline in Trans itio n
•
Tactical Purchasing
Strategic Sourcing
•
Regional Focus
Global Focus
•
Large Supplier Base
Strategic Partners
•
Commodity Purchases
Technology Investments
•
Product Focus
Solution Focus
•
Buying Parts
Managing Processes
•
Price Focus
Total Cost / Value
Re s e arc h Finding s
•
The world of selling is dynamic by customers’
changing needs and values.
•
Customers are more reliant upon sellers for:
– information
– advice
– problem solving
•
Information technology is having a major
impact on customer / seller relationships.
•
Total organization win, sustain, and grow
customer relationships.
Implic atio ns fo r S ale s pe o ple
•Salespeople need to understand how to:
•
Respond to the needs customers have for
information, advice and problem solving.
•
Create value beyond their products and
services in a way that differentiates the
selling organization from its competition.
•
Create and manage the organization-toorganization relationship.
S ale s Dis c ipline fo r the 90’s
How you can…
Thinking Strategically
Anticipate ways to create
value for customers
Managing Information
Deliver focused, usable
information to customers and
associates
Advancing the Relationship
Increase customers’ trust in
and commitment to you and
your company
Orchestrating Resources
Form an efficient sales team
and manage it costeffectively
Ke y S hift— S e lling Co mpe te nc ie s
NOW
Strategic
Selling
FUTURE
Strategic
Selling
“World Class”
• Work Processes
– Systems
Transactional
Selling
• Information Flow
Transactional
Selling
“Bo tto m Line ”
A business can no longer rely
on the uniqueness of their
products to retain customers
or grow new sales revenue.
Customers will align their business with strategic
suppliers who understand their business and
bring a unique offering which adds value—
impacts their “bottom line” through increased
sales revenue or reduced costs
Natural S ale s S kills
5%
35%
60%
5% “Process the requisite selling skills that
make them stand out”
35% “Just manage to pay their way”
60% “Just there for the beer”
✔ Super Salesperson’s Characteristics
•
•
•
•
•
Charisma in sales situation
Sense of humor
Good planning and preparation skills
Physical energy
Tenacity and resilience at rejection
Peak Sales Performers
Study of 1,500 Achievers Over 20 years
• Take risks and innovate
• Powerful sense of mission
• More interested in problem solving
• See customers as partners
• Rejection is information
• Use mental rehearsal
THE S ALES PERS ON OF TODAY IS EXPECTED
TO:
•
•
Do more forecasting of future customer requirements
•
Spend more time planning calls
•
Spend more time in group, system, and strategic selling
•
Improve territory management
•
•
•
•
Do less driving in the territory
Spend more time in telephone selling
Do more “active” selling
Prepare more detailed market reports
PROFITS
The Ke y Challe ng e
Sales Productivity
Where:
=
G.M. =
C.O.S. =
G.M.
C.O.S.
Gross Margin Dollars
Cost of Sale in Dollars
Implications
1.
Less discounting.
2.
Selling higher margin products.
3.
Selling more product lines to each customer
(cross-setting).
4.
Being more selective and discriminating in
qualifying potential buyers.
5.
Better use of selling time (deployment).
S ALES FORCE PRODUCTIVITY
1st
Effectiveness
Clear priorities
in terms of:
• Markets
• Customers
• Products
• Activities
And clear
strategy
To drive the
allocation of
resources
+
2nd
Efficiency
Managing the
allocation of
sales resources
to:
• Markets
• Customers
• Products
• Activities
Measure the
"return on
investment"
regularly.
=
Productivity
Components of Sales Productivity
PRODUCTIVITY
EFFICIENCY
EFFECTIVENESS
Number of doors
opened
What is done
once in door
S UMMARY
Sales Efficiency
Sales Effectiveness
Defined
Getting in front of
customer at minimum
cost
Using skills and abilities
to maximize sales
potential
Mechanisms
for improving
Working harder:
– time management
– incentives
– call reports
– territory design
Working smarter:
– coaching
– skills training
– account strategies
Measures
– penetration
– call rates
– cost / call
– success rates
– repeat business
– sustainable margins