chapter 5

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<strong>chapter</strong> 5 · a concept of the future 131Selling is a business function that has undergone tremendous changes. In thepresence of new technologies and changing market contexts, the traditionalseven steps of selling (prospecting, pre-approach, approach, presentation, overcomingobjections, close, follow-up) have evolved from a transactional approachto a relational approach. 27 In view of the costs of a sales person, the sales processdesign has become a major challenge for many organisations. 28 With costssoaring to more than €200 per sales call (for a regional prospect or customer),management is understandably keen to optimise revenue from sales.The prima donnas of sales are often viewed with ambiguous emotions, evenenvy, by other employees. Why do they have such a nice car? Why are they havinga nice time selling in the Far East, while others are working so very hardhere at home? Why is it that they are earning a nice commission on unprofitablesales? Much of the problem can be explained by a difference in attitude andclimate. A strong business model, however, requires the organisation to weldall its business processes seamlessly together. Five elements will determine theperformance of a sales force:• What is the quality of the information which the sales force has at its disposal?• What is the competitive strategy deployed by the company within the market?• How well is the company equipped to recruit good sales representatives andhow does the company train its sales force?• What are the motivation and compensation systems used by the company?• How does the company monitor the performance of its sales representatives?In making market hunting plans, it is wise to explicitly address the issue ofsales capacity. In a company we were once working with, sales growth from newcustomers for the following year was budgeted at €2.3 million. A quick calculationrevealed the true challenges. Being in the business of equipment sales, thecompany’s accounting records over the past two years suggested that the averagenew customer bought €116,000 worth of equipment. In view of inflation, afigure of €120,000 was used in the subsequent calculations. This implied that19 new customers were needed to realise the market hunting goals. A checkwith the sales staff and the sales manager revealed that the average sales personconducted one sales visit per day. Converting a lead into a success required anaverage of seven sales calls. It also took an average of two sales calls to deem aprospect a non-hit. In view of their limited market share and brand appeal inthe market, they were successful with approximately 1 out of 9 leads. The mathematicsare simple:© rudy moenaert, henry robben, peter gouw, lannoocampus • marketing strategy & organization
132 marketing strategy & organization• The expected number of sales calls needed to acquire one new customer is 23((1*7) + (8 * 2));• The approximate number of sales calls needed to accomplish the objective is437 (19 * 23);• Assuming 220 working days per year, the company needs two full time salespersons to achieve the market hunting goals (437 / 220).The calculation is easy, but finding an appropriate solution is more difficult.'Working harder' is not generally a wise response. In this specific case, the salespersons were already reasonably stretched, spending 50% of their time on customerinteractions, 30% on the road and 20% on administration. In addition,they operated with limited market information. One straightforward optionwas the recruitment of two additional sales reps. Another option involved thepossible re-allocation of scarce sales force time from C-customers to the huntingsegment. Another approach could have been a revision of the go-to-marketstrategy.Go-to-Market Strategy: Divide and Conquer© rudy moenaert, henry robben, peter gouw, lannoocampus • marketing strategy & organization‘Customers buy more when you meet them where they want to do business.Otherwise they will buy less.’ This is Friedman and Furey’s matter-of-fact conclusion.29 A successful go-to-market strategy sets its sights on the customer. Itis the task of the marketer to describe the way-to-market architecture, relateit to the customer’s activities and determine the final go-to-market strategy. 30This may involve the use of distributors to bring the company’s offer to themarket place. Distributors fulfil multiple roles in exchange for the margin theyreceive: they stimulate demand, keep stock, deliver goods, provide after-salesservice, etc.. A successful distributor accomplishes a very difficult task: gettingthe right assortment at the right place at the lowest cost to the right buyer. Wehave decided to include the go-to-market map of an industrial SME (Figure 5.4).While simple, it summarises the go-to-market strategy of many such firms.In this example, the company distinguishes between its key accounts and thecustomers who it services through resellers. While this go-to-market map isconveniently straightforward, it nonetheless revealed major issues for the companyconcerned:• The criteria for handing on calls from the company call centre to either the internalsales force or the external resellers were subjective rather than objective;• Cold sales calls are very expensive. The analysis showed that the sales representatives,already being over-stretched, were too heavily engaged in lead
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chapter 5

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