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Strategic 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 dont know where I am going. Cheshire Cat: Then it doesnt matter which way you go!!

Lewis Carroll 1872 Through the Looking-Glass

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.

Definition of Strategy/Strategic
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 Strategic Planning is Not


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 its 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.

Simplified Process of Strategic 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.

Simplified Process of Strategic Planning (Cont.)


Theres 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.

Simplified Process of Strategic Planning (Cont.)


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.

Simplified Process Of Strategic Planning- Start By Studying The Way It Is Now


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.

1. 2. 3.

Data External Situation Internal Situation Capabilities and competencies

4.

Ideas Assumptions

Analysis 5. Strategic assessment Strategic Issues

6.

Direction Strategies

7.

Commitment Mission Statement Goals Objectives

8. 9. 10.

Implementation Action Plans Budgets Schedules

Simplified Process of Strategic Planning- How it Works


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 Long Term Business Plan Market Plan Shorter Term Business Plan Marketing Information

Sales Plan

Key Account Strategy

Target Account Strategy

Maintenance Account Strategy

Why Bother Account Strategy Strategic

Territory Plans

Action Plans

Tactical

Key and Target Account Plans

Control & Evaluation

Start by Studying the Way It Is Now


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 SELECTING KEY/TARGET ACCOUNTS


Strong High Weak

Invest / Grow
ACCOUNT ATTRACTIVENESS

Selectively Invest Manage for Cash / Withdraw

Maintain

Size Growth Profitability Location Purchasing criteria and processes Current suppliers Status of customer (prestige)

Low

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 ANALYSIS


Strong
High Strength of Position Weak TARGET
Attractiveness: Accounts are potentially attractive since they offer high opportunity, but sales organization currently has weak position with accounts. Sales call strategy: Selected accounts should receive a high level of sales calls to strengthen the sales organizations position.

KEY
Attractiveness: Accounts are very attractive since they offer high opportunity and sales organization has strong position.

Sales call strategy: Accounts should receive a high level of sales calls since they are the sales organizations most attractive accounts.

Account Opportunity

MAINTENANCE
Attractiveness: Accounts are somewhat attractive since sales organization has strong position, but future opportunity is limited. Sales call strategy: Accounts should receive a moderate level of sales calls to maintain the current strength of the sales organizations position. And, efforts should be made to replace field sales calls with telephone sales.

WHY BOTHER
Attractiveness: Accounts are very unattractive since they offer low opportunity and sales organization has weak position. Sales call strategy: Accounts should receive no field sales calls and a minimum of inside sales resources.

Low

ACCOUNT SEGMENTATION AND PRIORITIZATION


High KEY ACCOUNTS
10-20% of your account base
80% of your GP$ Receives less than 50% of your resources

TARGET ACCOUNTS
(Your competitions Key Accounts)

ACCOUNT ATTRACTIVENESS

Gets very little attention

MAINTENANCE ACCOUNTS
40-45% of your account base 10-15% of your GP$ Receives 30-40% of your resources

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

Low Strong

YOUR STRENGTH OF POSITION

Weak

Sales Team and Selling Effort


Strong
Sales Channel: Major Account PROGRAMS Selling Effort: Heavy by Specialist

KEY

TARGET
Sales Channel: Direct Marketing, Teleselling, and Field Selling Selling Effort: Heavy (best prospects) Low (other prospects)

ACCOUNT OPPORTUNITY

Sales Channel:

Field Selling and Inside Sales Heavy

Selling Effort:

MAINTENANCE
Sales Channel: Inside Sales Field Selling and Teleselling Moderate

WHY BOTHER
Sales Channel: Teleselling, Direct Marketing, and Some Inside Selling Effort: Low

Selling Effort:

Weak

Strong

COMPETITIVE POSITION

Weak

Changing Business Environment

Leads to
Changing Selling Environment

The Selling Ballgame


Better Understanding of
Customers Needs

Resulting in
Harder to Get and Hold Customers and It Costs More!

Better Selectivity
Better Selling Strategies Better Time & Territory
Management

Implications

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%

Administration 16%

Travel 17%

HOW SALESPEOPLE SPEND THEIR TIME


Acct. Service/ Coordination 11%

2001

Phone Selling 25%

Face-to-Face Selling 29%

Administration 16%

Travel 18%

2000

Phone Selling 25%

Face-to-Face Selling 30%

The Contemporary Marketing Concept


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 needsthey 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. Customer Change Drivers

Raw material shortages

Regulatory agencies
Environmental Global competition

Trade agreements (NAFTA, GATT)


Mergers/acquisitions Automation/technology Reduction in cycle time Price Quality Down sizing

Customer Change Drivers (contd.)

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. Purchasing Behavior/Buying Relationships

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

Purchasing Behavior/Buying Relationships (contd.)

Broader offering of true value added services

Proof of performancevendor 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.

Role of the Sales Team



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 levelsell 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.

Sales Force Issues / Problems



Willingness to change Different organizational structure, e.g., Hunters and Farmers New skills Sales force automation Accountability / evaluation / compensation More specialized sellers requiredcurrently generalists Total company will become a selling teamcultural change Shift paradigm from products to integrated solution systems More research at the account level Sharing of customer information

V.

Change Areas

International, national account perspectives

Better technical skills


Better research skills Understanding Customer specialized sales forces

Why Do Sales Organizations Become Obsolete?


Growth Evolution

I
Any business is good!

II
All Business is good!

III
What business is good?

IV
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 PURPOSE
SALES FORCE TIME & EFFORT
Customer Resource Allocation Decisions What segment(s) to call on What volume segments to call on: High volume vs. low volume National accounts vs. smaller accounts What profitability segments to call on: highly profitable vs. less profitable New vs. existing accounts Product Resource Allocation Decisions New vs. existing products High volume vs. low volume products Easy to sell vs. hard to sell products Familiar vs. unfamiliar products 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 Activity Resource Allocation Decisions Hunting vs. farming Selling vs. servicing Relationship expert vs. product expert vs. industry expert vs. customer expert

High penetration vs. low penetration accounts


What geography to focus on Headquarters vs. field calls

SELLING PROCESSES

Where buyers experience the greatest challenges

EVOLUTION OF BUYING PROCESS


Selling organizations get involved at different stages in the customers buying process

Planning 1

Recognizing Searching 2 3

Evaluating 4

Selecting 5

Committing Implementing Tracking 6 7 8

VENDOR
Present-Handle Objections-Close Where Sellers Focus Efforts

SUPPLIER
Searching through implementing

ADDED VALUE PARTNER


Entire process: Planning through tracking results

Sellers Boundary Role

Communication

Communication

Selling Organization

REP

Buying Organization

Marketing Strategy
policies procedures programs

Procurement Strategy
policies procedures programs

Transactions and Relationships


Transaction Selling
1. Selling dominates learning

Relationship Creation
1. Learning about the customer is intense and dominates selling
2. Listening dominates talking 3. Teaching the customer is need driven and problem focused 4. The goal is to build relationships through credibility, responsiveness, and trust

2. Talking dominates listening 3. Persuading the customer is product driven and benefits focused 4. The goal is to build buyers and sales through persuasion, price, presence and terms

TYPICAL PROCESS
Recognition of Needs Evaluation of Options Resolution of Concerns Purchase Implementstation

Help customers recognize and define problems and needs in a new or different way.

Show superior solutions, options, and approaches that customers may not have understood or considered.

Help customers overcome and remove obstacles to acquisition.

Make purchase painless, convenient, and hasslefree.

Show customers how to install and use product.

ADDING VALUE TO A TRANSACTIONAL SALE


Recognition of Needs Evaluation of Options Resolution of Concerns Purchase Implementstation

Customer has already defined needs and problems completely.

Customer already understands alternative solutions.

Customer 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.

Seller can help make purchase painless, convenient, and hasslefree. Little or no opportunity to create sales value.

Customer generally knows how to use product.

ADDING VALUE TO A CONSULTATIVE SALE


Recognition of Needs Evaluation of Options Resolution of Concerns Implement -tation

Purchase

Seller can create most value early in the process by helping customers define needs and solutions.

Consultative seller can design customized solutions and help customers make informed choices.

Consultative seller can counsel customers and help resolve concerns.

Consultative seller can advise and problem solve implementati on issues.

Sales Call Time


TYPICAL SALESPEOPLE KEY ACCOUNT SALESPEOPLE

5%
10%

Needs Analysis
Problem Solving

50%
30%

35%
50%

F/B. Presentation
Trying to Close

15%
5%

Buying Discipline in Transition


Tactical Purchasing Regional Focus Strategic Sourcing Global Focus

Large Supplier Base


Commodity Purchases Product Focus Buying Parts Price Focus

Strategic Partners
Technology Investments Solution Focus Managing Processes Total Cost / Value

Research Findings

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.

Implications for Salespeople

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.

Sales Discipline for the 90s


How you can
Thinking Strategically Managing Information Anticipate ways to create value for customers Deliver focused, usable information to customers and associates

Advancing the Relationship

Increase customers trust in and commitment to you and your company


Form an efficient sales team and manage it cost-effectively

Orchestrating Resources

Key ShiftSelling Competencies


NOW FUTURE

Strategic Selling

Strategic Selling

World Class
Work Processes Systems Information Flow

Transactional Selling

Transactional Selling

Bottom 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 Sales Skills


5% 60% 35%

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 Salespersons 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 SALESPERSON 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 Key Challenge


Sales Productivity Where:
Implications 1. Less discounting. 2. Selling higher margin products.

G.M. C.O.S. Gross Margin Dollars Cost of Sale in Dollars

G.M. = C.O.S. =

3. Selling more product lines to each customer (crosssetting).


4. Being more selective and discriminating in qualifying potential buyers.

5. Better use of selling time (deployment).

SALES FORCE PRODUCTIVITY


1st Effectiveness

2nd Efficiency

Productivity

Clear priorities in terms of: Markets Customers Products Activities And clear strategy To drive the allocation of resources

Managing the allocation of sales resources to: Markets Customers Products Activities Measure the "return on investment" regularly.

Components of Sales Productivity

PRODUCTIVITY

EFFICIENCY
Number of doors opened

EFFECTIVENESS
What is done once in door

SUMMARY
Sales Efficiency
Defined Getting in front of customer at minimum cost Working harder: time management incentives call reports territory design

Sales Effectiveness
Using skills and abilities to maximize sales potential Working smarter: coaching skills training account strategies

Mechanisms for improving

Measures

penetration call rates cost / call

success rates repeat business sustainable margins

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