10. Strategy and sales program planning

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Part I

THE BIG PICTURE

Chapter 2:

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The natural progression

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Business
Strategy
Business

Strategy MarketingMarketingStrategyStrategy

Go-to-Market
Strategy
Supply Chain 
Management (SCM)
Customer
Relationship
Management (CRM)
LEVEL 2

Strategy

Implementation

Decisions Product DevelopmentManagement

(PDM)
LEVEL 1

Top

Management
Decisions

Figure 2-1 The Sales Force Decision Sequence

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Figure 2-2

: Factors Influencing Strategic Management

Distinct competencies
Marketing
Financial
Technology
Information
Distinct competencies
Marketing
Financial
Technology
Information
Environmental constraints
Legal & regulatory

Demographics
Economic Conditions
Technology
Competitive conditions
Sociocultural factors
Environmental constraints
Legal & regulatory

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Figure 2-3: Hierarchy of Sales Objectives

Corporate goals

Maximize shareholder wealth
Corporate goals

Maximize shareholder wealth
Business unit objectives

12% revenue growth
Grow pre-tax profits by 18%

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%

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

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

Salesperson objective

Achieve sales revenues of $1.2 million in product A
Obtain $0.8 million in gross margin dollars

Major account objective

Achieve sales revenues of $95,000 in product A
Obtain an average gross margin of 80%

Major account objective

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A Look into What

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0
10
70
60
50
40
30
20
29.8% 31.9%
66.1%

7.7% 14.0% 7.8%

Building
Brand of
Company/
product
Enhancing
credibility
of company
product
Increasing
sales/
revenue
Investor

relations Savingcosts Other

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0
100
60
80
40
20
Building
Brand of
Company/
product
Enhancing
credibility
of company
product
Increasing
sales/
revenue
Investor

relations Savingcosts Other

How Successful Were You at Reaching Your Goals?

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Types of Strategies (Generic)

and Their Effect on Sales

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Build Strategy
Expand market

share in a 
high-growth market
Harvest
Divest
Secure 
Added
Distribution
Add new
customers
Provide high
presale 
services
Provide 
product
& market
feedback
Focus on
volume 
growth
Build current 
relationships

Call on targeted
current 
customers
Increase service 
to current 
customers
Call on 
targeted new

customers
Focus on 
account 
penetration

Call on most 
profitable 
accounts only
Reduce overall 
service levels
Reduce 
inventory 
levels
Maintain 
distribution
Invest as 
little time as

necessary
Marketing
Strategies
Sales
Strategies
Hold Strategy
Maintain market 
share at the 
lowest costs 
possible

Harvest Strategy

Reduce costs 
and focus on 
profit, not market 
share

Divest Strategy
Reduce

inventory
at lowest cost
possible
Eliminate
services
Offer 
exceptional 
pricing
Focus on 
one time 
sales
Minimize 
time 
commitment

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Sales Force Ranking and Sales Growth:

Pharmaceuticals (1988-1990)

Low

High

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Sales Force Ranking and Sales Growth:

Computers (1988-1990)

Low

High

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A More Detailed Look at

Marketing Strategy



The Three Major Functions of

Marketing:

–

Segmentation

–

Targeting

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1. What is the best way to segment the market?

2. What are the essential activities required by

each segment?

3. What group of go-to-market participants

should perform the essential activities?

4. Which face-to-face selling participants should

be used?

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Figure 2-6 Essential Activities

Interest Creation

Purchase

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Large

Small

Low Information,
Low Solution Needs

High Information,
High Solution Needs

Buying
Process
Customer Size

and
Opportunity

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Direct Sales
Force
Direct Sales
Force
Agents
Distributors
Retailers
Agents
Distributors
Retailers Integrators

Integrators AlliancesAlliances AdvertisingPromotion

Direct Mail
Advertising
Promotion
Direct Mail

Tele-marketing

Tele-marketing InternetInternet

Direct Indirect

Non-Sales Force Options
Sales Force Options

Company

Customers and Prospects

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Figure 2-8

Comparing Various Go-to-Market Alternatives

Advertising

Direct Mail

Internet

Telemarketing

Sales Force

Effectiveness
Efficiency

High Sales
per Exposure
Low Cost

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Customer Base

Account

Teams GeographicSales Force
Direct Sales Force

Industry

Teams Inbound Outbound

Telemarketing Partners Internet

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Customer Base

Account

Teams

Direct Sales Force

Inbound

Telemarketing

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Customer Base

Account
Teams

Geographic
Sales Force

Direct Sales Force

Inbound

Telemarketing

Partners

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Customer Base

Account

Teams GeographicSales Force
Direct Sales Force

Outbound
Inbound

Telemarketing Internet

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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

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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

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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

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• 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

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Figure 2-12

Sales Force Program

Marketing Objectives, Strategy, and
Strategy Implementation Program

Account Relationship Strategy

Desired Selling Actions
and Behaviors

Organizational Structure

Competency Development Program

Leadership System

Estimates of sales
potential and

sales forecast

Estimates of sales
potential and

sales forecast

Estimates of sales force
size and budget

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Account

Relationship

Strategy

• 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?

Sales Force

Selling

Activities

• 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?

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Sales Force Program Elements – Cont.

Organizational

Structure

• 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?

• Experience level of new salespeople?

• Length and purpose of initial training program?
• Nature of continuing development program?

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Leadership

Program

• 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?

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Investment

by

Supplier

Investment by Customer

Tran
sactio

nal

Relat
ionsh

Cons
ultati

Relat
ionsh

Enter
prise

Relat
ionshi

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Different Sales Orientations

Sales
Argument
Profile of 
Sales
Customer
Contacts
Offering
Success
Factors
Best products
“Product Expert”
Narrow Space
(e.g., purchasing)

Best products with a
competitive price

Product excellence and/

or cost leadership

Product Sales

Solutions to your needs

“Solution provider”

Function/ department

Product and service
solutions to customer needs

Understanding the
customer’s needs

Solution Sales

Impact on your
business results

“business consultant”

All levels

Valuable solutions to
support competitive advantage

Driving customer 
profits and EVA

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10. Strategy and sales program planning

<b>Part I</b>

<b>THE BIG PICTURE</b>

Chapter 2:

<b>The natural progression</b>

<b>Figure 2-1 The Sales Force Decision Sequence</b>

<b>Figure 2-2</b>

<b>: Factors Influencing Strategic Management</b>

<b>A Look into What </b>

<b>How Successful Were You at Reaching Your Goals?</b>

<b>Types of Strategies (Generic) </b>

<b>and Their Effect on Sales </b>

<b>Sales Force Ranking and Sales Growth: </b>

<b>Pharmaceuticals (1988-1990)</b>

<b>Low</b>

<b>High</b>

<b>Sales Force Ranking and Sales Growth: </b>

<b>Computers (1988-1990)</b>

<b>Low</b>

<b>High</b>

<b>A More Detailed Look at </b>

<b>Marketing Strategy </b>



The Three Major Functions of

Marketing:

Segmentation

Targeting

1. What is the best way to segment the market?

2. What are the essential activities required by

each segment?

3. What group of go-to-market participants

should perform the essential activities?

4. Which face-to-face selling participants should

be used?

<b>Figure 2-6 Essential Activities</b>

<b>Interest Creation</b>

<b>Purchase</b>

<b>Company</b>

<b>Company</b>

<b>Customers and Prospects</b>

<b>Customers and Prospects</b>

<b>Figure 2-8</b>

<b> Comparing Various Go-to-Market Alternatives</b>

<b>Customer Base</b>

<b>Customer Base</b>

<b>Customer Base</b>

<b>Customer Base</b>

<b>Customer Base</b>

<b>Customer Base</b>

<b>Direct Sales Force</b>

<b>Telemarketing</b>

<b>Partners</b>

<b>Customer Base</b>

<b>Customer Base</b>

<b>Figure 2-9</b>

<b> Product Development Management </b>

<b>Subprocesses</b>

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

<b>Figure 2-10</b>

<b> Supply Chain Management Subprocesses</b>

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

<b>Figure 2-11</b>

<b> Customer Relationship Management </b>

<b>Subprocesses</b>

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