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 don’t know where I am going.

Cheshire Cat: Then it doesn’t 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 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.

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.)

• 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.

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.

Data1. External Situation2. Internal Situation3. Capabilities and

competencies

Ideas4. Assumptions

Analysis

5. Strategic assessment Strategic Issues

Direction 6. Strategies

Commitment7. Mission Statement Goals Objectives

Implementation8. Action Plans9. Budgets10. 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

Execution

Monitor Developments and Progress

Sales Plan

TargetAccount Strategy

KeyAccount Strategy

MaintenanceAccount Strategy

Why BotherAccount Strategy

Territory Plans

Key and Target Account Plans

Action Plans

Control & Evaluation

Shorter Term Business PlanMarket Plan

Strategic Planning

Total Organizational Planning

Marketing Information

Strategic

Tactical

Long Term Business Plan

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 weaknessesFiguring 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?

POSITIONING

Which segments / customers will we concentrate on ?

Whom will we challenge for these customers?

What incentives will we provide to get them to buy from us… rather than from competitors?

CUSTOMERTARGETS

COMPETITORTARGETS

CORESTRATEGY

BUSINESS STRENGTHS

ACCOUNTATTRACTIVENESS

High

Low

Strong Weak

DEFINING AND SELECTING KEY/TARGET ACCOUNTS

• Size• Growth• Profitability• Location• Purchasing criteria

and processes• Current suppliers• Status of customer

(prestige)

• 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• Quality of relationships

Invest / GrowSelectively

Invest

MaintainManage for

Cash / Withdraw

Strong Strength of Position Weak

High

AccountOpportunity

Low

ACCOUNT PORTFOLIO ANALYSIS

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 organization’s most attractive accounts.

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 TARGET

MAINTENANCE WHY BOTHERAttractiveness:

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 organization’s position. And, efforts should be made to replace field sales calls with telephone sales.

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.

HighA

CC

OU

NT

AT

TR

AC

TIV

EN

ES

S

Low

Strong WeakYOUR STRENGTH OF POSITION

ACCOUNT SEGMENTATION AND PRIORITIZATION

KEY ACCOUNTS

• 10-20% of your account base

• 80% of your GP$

• Receives less than 50% of your resources

TARGET ACCOUNTS(Your competition’s Key Accounts)

MAINTENANCE ACCOUNTS WHY BOTHER? ACCOUNTS

• Gets very little attention

• 40-45% of your account base

• 10-15% of your GP$

• Receives 30-40% of your resources

• 30-40% of your account base

• Less than 5% of your GP$

• Receives 20-30% of your resources

• Creates 90% of your “headaches”

Str

on

gW

eak

AC

CO

UN

T

OP

PO

RT

UN

ITY

Strong COMPETITIVE POSITION Weak

Sales Team and Selling Effort

Sales Channel: Field Selling and Inside Sales

Selling Effort: Heavy

KEY TARGET

MAINTENANCE WHY BOTHER

Sales Channel:Major AccountPROGRAMS

Selling Effort:Heavy by Specialist Sales Channel: Direct Marketing,

Teleselling, and Field Selling

Selling Effort: Heavy (best prospects)Low (other prospects)

Sales Channel: Inside SalesField Selling andTeleselling

Selling Effort: Moderate

Sales Channel: Teleselling,Direct Marketing,and Some Inside

Selling Effort: Low

Better Understanding of Customer’s Needs

Better Selectivity

Better Selling Strategies

Better Time & Territory Management

TheSelling

Ballgame

Changing BusinessEnvironment

Leads to

Changing SellingEnvironment

Resulting in

Harder to Get and Hold Customers and

It Costs More!

Implications

PRIORITIES

Time Management

Your Scarcest Resource

TOTAL BUSINESS DAYS 2002 252Less:

• Vacation 10• Holidays 10• Personal absences 5 25

WORKING DAYS AVAILABLE IN YEAR 227Less:

• Meetings, Trade Shows, etc.• Training• Customer unavailability• Miscellaneous

TOTAL

Face-to-FaceSelling29%

Face-to-FaceSelling30%

PhoneSelling25%

PhoneSelling25%

Administration

16%

Administration

16%

Travel17%

Travel18%

HOW SALESPEOPLESPEND THEIR

TIME2001

2000

Acct. Service/

Coordination

13%

Acct. Service/Coordination

11%

The Contemporary Marketing Concept

Customer OrientationThe 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 OrientationA 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 EffortAll 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 (cont’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. 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 (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. 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 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. 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 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. Change Areas

• International, national account perspectives

• Better technical skills

• Better research skills

• “Understanding”

• Customer specialized sales forces

Why Do Sales Organizations Become Obsolete?

Any business is good!

All Businessis good!

What business is good?

Certain business is good!

One productOne market

One product One big market

Old/new products many

markets

Redefinecustomer

segment selling

Sell tosurvive

Sell volume to lower costs

Sell volume to hold share

Optimize to get best returns

Start-upVolumegrowth Market share Optimization

Growth Evolution

I II III IV

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

High penetration vs. low penetration accounts

What geography to focus on

Headquarters vs. field calls

THE PURPOSE

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

SALES FORCE TIME & EFFORT

SELLING PROCESSES

Where buyers experiencethe greatest challenges

EVOLUTION OFBUYING PROCESS

Planning1

Recognizing2

Searching3

Evaluating4

Selecting5

Committing6

Implementing7

Tracking8

Selling organizations get involved at different stages in the customer’s

buying process

VENDOR“Present-Handle Objections-Close”

SUPPLIERSearching through implementing

ADDED VALUE PARTNER

Entire process: Planning through tracking results

Where Sellers Focus Efforts

Sellers Boundary Role

Communication

SellingOrganization

Marketing Strategypolicies

proceduresprograms

REP

Communication

BuyingOrganization

Procurement Strategypolicies

proceduresprograms

Transactions and Relationships

1. Selling dominates learning

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

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

Transaction Selling Relationship Creation

TYPICAL PROCESS

Help customersrecognize 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 hassle-free.

Recognitionof Needs

Evaluationof Options

Resolutionof Concerns Purchase

Show customers how to install and use product.

Implement-station

Customer generally

knows how to use

product.

Recognitionof Needs

Evaluationof Options

Resolutionof Concerns Purchase

Implement-station

Little or no opportunity

to create sales value.

Seller can

help make

purchase

painless,

convenient,

and hassle-

free.Little or no opportunity

to create sales value.

Customer has few

issues or concerns.

Customer already

understands alternative solutions.

Little or no opportunity

to create sales value.

Customer has already

defined needs and problems

completely.

Little or no opportunity

to create sales value.

ADDING VALUE TO A TRANSACTIONAL SALE

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

implementation issues.

Recognitionof Needs

Evaluationof Options

Resolutionof Concerns Purchase

Implement-tation

ADDING VALUE TO A CONSULTATIVE SALE

Sales Call Time

5% Needs Analysis 50%

10% Problem Solving 30%

35% F/B. Presentation 15%

50% Trying to Close 5%

TYPICALSALESPEOPLE

KEY ACCOUNTSALESPEOPLE

Buying Discipline in Transition

• 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

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-to-organization relationship.

Sales Discipline for 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 cost-effectively

Key Shift—Selling Competencies

“World Class”

• Work Processes

– Systems

• Information FlowTransactional

Selling

StrategicSelling

FUTURE

StrategicSelling

TransactionalSelling

NOW

“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

60%

5%

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 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 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

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).

Sales Productivity =G.M.

C.O.S.

Where: G.M. = Gross Margin DollarsC.O.S. = Cost of Sale in Dollars

SALES FORCE PRODUCTIVITY

1stEffectiveness

2ndEfficiency

Productivity

Clear priorities in terms of:

• Markets• Customers• Products• Activities

And clear strategyTo drive the allocation of resources

Managing the allocation of sales resources to:

• Markets• Customers• Products• Activities

Measure the "return on investment" regularly.

=+

EFFICIENCY EFFECTIVENESS

PRODUCTIVITY

Number of doorsopened

What is doneonce in door

Components of Sales Productivity

SUMMARY

Defined Getting in front of Using skills and abilitiescustomer at minimum to maximize salescost potential

Mechanisms Working harder: Working smarter:for improving – time management – coaching

– incentives – skills training– call reports – account strategies– territory design

Measures – penetration – success rates– call rates – repeat business– cost / call – sustainable margins

Sales Efficiency Sales Effectiveness