Strategy and Sales Program Plannig

STRATEGY AND SALESPROGRAM PLANNING

“Sharing a Vision”Two men were struggling to get a large crate through the door. They struggled and strug-gled, but the crate would not budge. Finally, one man said to the other, “We’ll never getthis crate in.” Replied his partner, “I thought we were trying to get it out.”

Chapter Consultants:Scott Smith, Vice President—Sales &Marketing, SABRE Group, Inc.Joseph P. Clayton, President and Chief Executive Ofﬁcer, Sirius Satellite Radio

LEARNING OBJECTIVES

After studying this chapter, you should be able to:Describe the major elements of business strategy.State the basic elements of strategic marketing planning.Explain what is meant by strategic implementation process decisions.Describe the purpose of a sales force program and list its major elements.Tell what an account relationship strategy is and explain its purpose.

“AN AWARD-WINNING ACCOUNT”

Reynolds and Reynolds is a $1 billion company headquartered in Dayton, Ohio, providingintegrated information management solutions, including retail and enterprise managementsystems, networking, e-business applications, CRM, and consulting services. The EnterpriseSolutions Group at Reynolds is responsible for sales to Reynolds’ customer accounts gener-ating more than $90 million in annual revenue. The Group has 15 Partnership Executiveswho work with the 20 largest automotive retail and distributor groups in North America,helping them achieve outstanding business results.The Strategic Account Management Association recently presented the Account Perfor-mance Award to the Reynolds-Southeast Toyota Distributors (SET) account, located in Deer-ﬁeld Beach, Florida.

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SET has 163 dealer locations in the southeastern United States with anannual sales volume of $7 billion. Reynolds put together a dedicated account team from ninefunctional areas, including sales and marketing, Web services, ﬁnancial services, CRM solu-tions and software solutions. Together with this account team, Reynolds’ Partnership Execu-tive developed an account playbook for SET that laid out how Reynolds needed to sell,

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deliver, and support its business solutions. SET bought the Reynolds dealer management sys-tem because it was a critical step in a long-range strategy that would lead to a solid partnershipand greater business results for many years. The basis for the partnership was the account teamselling SET corporate on developing the next generation of the dealer management system.Over the next two years Reynolds installed its dealer management systems in 80 percentof the SET dealerships. While these installations were going on, Reynolds people were inter-viewing more than 200 SET associates to capture their requirements and to develop the nextgeneration of solutions and services. After the systems had been in place for a period of time, SET and Reynolds sat down together to quantify the value that Reynolds had deliveredto SET. Some of the performance metrics utilized in this review were annual net profits andnew business from the Internet lead generation system. It was discovered that dealers usingthe Reynolds system were, on average, realizing $200,000 more in annual net profits thandealers not using the system.The benefits of the relationship to Reynolds are equally impressive. After the partner-ship began, Reynolds’ sales to SET jumped from $1.8 million to more than $16 million in 5years, resulting in a compounded annual growth rate on sales of 53 percent per year.The Reynolds account team is currently implementing a plan to provide financing andsupport services to all SET dealers for Toyota’s Technical Information System. This is thefirst time Reynolds has ever financed and supported a third-party system. Reynolds’ goalcontinues to be that of helping SET meet its business objectives. SET is also a solid refer-ence for new Reynolds prospects.The Reynolds-SET account case exemplifies many of the changes in the sales force rolethat will be discussed in this chapter: sales teams, selling to top management, partnering formutual benefit, and the type of supplier-customer intimacy that can be achieved. It is alsoimportant to note how the role of the salesperson, the account executive in the Reynolds case,has changed. Salespeople still communicate and close the sale with the customer, but noticethat salespeople must also spend much more time getting to know the account and workingwith many different areas of the account. The other side of the coin is that the account execu-tive is also spending more time gathering and coordinating the resources and expertise insideReynolds that can be brought to bear on a customer opportunity. The financial commitmentsbeing made to the account and the revenue opportunities are very significant and important toReynolds’ overall performance. The actions of the account executive and account team there-fore must be consistent with Reynolds’ overall business and marketing strategy. Achieving thisconsistency and its impact on the sales force is one of the primary focuses of this chapter.There is a natural sequence when making sales force and sales program decisions asdepicted in Figure 2-1. The level 1 decisions, business and marketing strategies, are made bythe firm’s top management along with the participation of the top sales executive, sometimesreferred to as the chief sales officer (CSO). Level 2 decisions are concerned with implement-ing a firm’s business and marketing strategy. As strategy implementation is likely to becross-functional, top sales executives participate along with managers from other functionalareas in the firm in making these decisions. Level 3 decisions are largely under the control of the sales management team and are the focus of the remaining sections of this text. Thishierarchical sequencing of decisions also guides the organization of the book.This chapter shows that a firm’s business and marketing strategy and implementationdecisions impact sales force program decisions. In other words, a firm’s strategy and imple-mentation decisions provide the context within which sales program decisions are made andimplemented. We do not attempt to fully explain business or marketing strategy; this is bet-ter accomplished elsewhere. Instead, we offer an overview of marketing strategy, whilefocusing mostly on the four-strategy implementation decisions because they more directlyinfluence a firm’s sales force program.Following this chapter, two Management Resources are presented: “Estimating Potentialand Forecasting Sales” and “Sales Force Investment and Budgeting.” These are considered

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important resource topics because sales executives need to know how to perform these activi-ties when either starting up a new sales force or completing their annual planning exercises.

BUSINESS STRATEGY

Strategic planning is employed to make better use of company resources and to create andsustain an advantage over the competition. Business strategy involves defining and articulat-ing an overall business mission, developing specific business goals, and designing a strategyfor achieving these goals. The factors influencing the strategic management planningprocess are depicted in Figure 2-2. Both marketing and sales personnel should be intimatelyinvolved in an organization’s strategic planning process because they understand the cus-tomers’ requirements and the sales force is often responsible for implementing key aspectsof a firm’s strategic plan. This is especially the case when the product is expensive, com-plex, and of high risk to the customer.

2

Business Mission

A well-defined business mission provides a sense of direction to employees and helps guidethem toward fulfillment of the firm’s potential. The basic character of an organization’sbusiness is defined by the

three Cs

—customers, competitors, and the company itself. Topmanagers should ask, “What is our business?” and “What should it be?” A

business missionstatement

should include information regarding (1) the types of customers it wishes to serve,(2) the speciﬁc needs to be fulﬁlled, and (3) the activities and technologies by which it will

BUSINESS STRATEGY

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BusinessstrategyLevel 1Top managementdecisionsLevel 2StrategyimplementationdecisionsLevel 3Sales forceprogramdecisionsMarketingstrategyGo-to-marketstrategyCustomerrelationshipmanagement(CRM)Productdevelopmentmanagement(PDM)Supply chainmanagement(SCM)Accountrelationshipstrategy

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FIGURE 2-1

The Sales Force Decision Sequence

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