Professional Documents
Culture Documents
MANAGEMENT
COMPETITION
STRATEGIC SALES
MANAGEMENT
A Boardroom
Issue
By Benson P. Shapiro,
Adrian J. Slywotzky and
Stephen X. Doyle
With the marketplace changing so rapidly and product lives shortening, sales has become a strategic issue. But how do you make certain it is
managed properly and that a companys best customers are satisfied? You do it by making sales a boardroom issue.
N AN ENVIRONMENT
...............................
Benson P. Shapiro is the Malcolm P. McNair Professor of Marketing at the Harvard Business School. He has published 19 articles in the
Harvard Business Review, including Leveraging to Beat the Odds: The New Marketing Mind-Set. Professor Shapiro is the co-editor of
Seeking Customers and Keeping Customers (Harvard Business School Press, 1992). Adrian J. Slywotzky is vice president of Corporate Decisions Inc., a Boston-based strategy consulting firm specializing in customer-driven strategies for growth. He is the author of
Value Migration (Harvard Business School Press, 1995). Stephen X. Doyle is a sales management consultant based in New York City.
This article is adapted from a teaching note. Reprinted by permission of Harvard Business School Publishing. Copyright 1994 by the
President and Fellows of Harvard College, all rights reserved.
29
Illustration by Bryan Wiggins
Issue 8
STRATEGY
MANAGEMENT
COMPETITION
A Word on Methodology
plexity of purchases.
at well-established companies,
of orchestrating it.
at work.
30
Third Quarter 97
MANAGEMENT
10%
6%
6
2
4%
5
2%
High
Shipping (1987-1989)
15%
10%
Growth
10
1%
30%
25
20
15
10
5
0
-5
-10%
Low
Low
Metals (1987-1989)
15%
-10
8%
13%
10%
10
1%
Low
Computers (1988-1990)
15%
8%
Pharmaceuticals (1988-1990)
Growth
Growth
COMPETITION
High
High
30%
20%
Growth
STRATEGY
5%
1%
Low
High
EXHIBIT I
SALES FORCE RANKING VS. SALES GROWTH
...............................
FINANCIAL PERFORMANCE
LINE IN AN INCREASINGLY
HOSTILE WORLD
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STRATEGY
MANAGEMENT
A.
ccount M
anagem
ent
Area of More
New Products
C.
Low
High
Low
Area of More
New Products
Area of Low
Differentiation
D.
Area of Low
Differentiation
High
Managem
ent
High
Impact of
A
Impact of
A
ccount M
anagem
ent
High
Low
High
Low
Amount of Product Differentiation
Product Life Cycle
Managem
ent
COMPETITION
B.
High
Low
High
Low
Impact of
Impact of
Low
High
Account
Account
Low
EXHIBIT II
IMPACT OF ACCOUNT MANAGEMENT
...............................
merous
manufacturing
emerging
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Third Quarter 97
STRATEGY
MANAGEMENT
COMPETITION
PRODUCT CYCLES
chain
boundaries
and
building
TO CUSTOMER POWER
competition.
the bottom.
33
Issue 8
STRATEGY
MANAGEMENT
COMPETITION
EXHIBIT III
ACCOUNT TRIANGLE
A.
B.
Price Pressure
Major
Accounts
Size of
Accounts
Major
Accounts
Size of
Accounts
Middle Accounts
Middle Accounts
Mini Accounts
Mini Accounts
Number of Accounts
Number of Accounts
C.
D.
Price Pressure
Price Pressure
Cost
Pressure
Major
Major
Accounts
Accounts
Size of
Accounts
Middle Accounts
Cost
Pressure
Mini Accounts
Accounts
Mini
Size of
Accounts
Most
Profitable
Accounts
Middle Accounts
Major
Accounts
Arm-Breaking
Frontier
Cost
Pressure
Number of Accounts
Number of Accounts
EXHIBIT IV
INCREASING CHANNEL CONCENTRATION
the account triangle. And costs continue to rise at the bottom. Thus, there
70%
70%
69%
60
50
40
30
60
49%
50
20
30
10
20
1989
TOP 8
10
1993
TOP 8
1983
TOP 8
70%
60
50
60
50
40
39%
40
30
29%
30
20
20
10
10
1992
TOP 8
Home Improvement
70%
42%
33%
40
General Merchandise
and Apparel
Drug Wholesalers
1989
TOP 8
1993
TOP 8
31%
22%
1989
TOP 8
1992
TOP 8
...............................
1
Benson P. Shapiro, V. Kasturi Rangan, Rowland T. Moriarty and Elliot B. Ross, Manage Customers for Profits (Not Just Sales), in Benson P.
Shapiro and John J. Sviokla (eds.), Keeping Customers (Harvard Business School Press, 1992), pp. 277-291.
34
Third Quarter 97
STRATEGY
MANAGEMENT
COMPETITION
Value
60
Retention
50
30
Development
20
10
0
1
-10
10
11
12
Acquisition
EXHIBIT V
CUSTOMER LIFE CYCLE LINE
...............................
CUSTOMER
1) account retention
5) account selection.
cost-effective way.
...............................
Frederick F. Reichheld and W. Earl Sasser Jr., Zero Defections: Quality Comes to Services, in Benson P. Shapiro and John J. Sviokla (eds.),
Keeping Customers (Harvard Business School Press, 1992), pp. 311-324.
35
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STRATEGY
MANAGEMENT
COMPETITION
falls apart.
even be recovered!
on retention, is a second.
motional power.
...............................
continued on page 39
James L. Heskett, Thomas O. Jones, Gary W. Loveman, W. Earl Sasser Jr. and Leonard A. Schlesinger, Putting the Service-Profit Chain to
Work (Harvard Business Review, March-April 1994), pp. 164-174. Reprint No. 94204.
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Third Quarter 97
STRATEGY
MANAGEMENT
COMPETITION
tential
high-profit
ability,
unsaleable or un-
Old Approach
1. Get New Accounts
judgment
profitable customer.
EXHIBIT VI
THE NEW MARCHING ORDERS
.....................
account retention
account dominance
impressive.
pricing
account selection.
itive imperatives.
in Exhibit VI.
...............................
Robin Cooper and Robert S. Kaplan, Measure Costs Right: Make the Right Decisions, in Benson P. Shapiro and John J. Sviokla (eds.),
Keeping Customers (Harvard Business School Press, 1992), pp. 337-353.
Robert S. Kaplan, Kanthal (A) and (B), Case Studies 190-002 and 003 (1989), Harvard Business School, Boston, Mass. 02163.
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STRATEGY
MANAGEMENT
COMPETITION
orientation.
7, 8
1. which accounts?
be accomplished?
4. what are the key interactions
with other parts of the company?
A sales force was traditionally or-
great example.
...............................
7
Stephen X. Doyle and Benson P. Shapiro, What Counts Most in Motivating Your Sales Force, in Benson P. Shapiro and John J. Sviokla
(eds.), Seeking Customers (Harvard Business School Press, 1992), pp. 237-253.
Benson P. Shapiro and Stephen X. Doyle, Make the Sales Task Clear, in Benson P. Shapiro and John J. Sviokla (eds.), Seeking Customers (Harvard Business School Press, 1992), pp. 255-259.
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Third Quarter 97
STRATEGY
MANAGEMENT
COMPETITION
be a business manager-to-business
alterations in customer
Product A
Product B
Product C
Task B1
Task C1
Task A1
Task A2
Task A3
Task B2
Task B3
Task C2
Task C3
EXHIBIT VII
SORTING OUT THE ORGANIZATION
trigger a fundamental
will it be in 2000?
.......................
Wal-Mart.
41
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STRATEGY
MANAGEMENT
COMPETITION
are gone.
grated approach.
ORGANIZATION RELATIONSHIPS
plantation centers.
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Third Quarter 97
STRATEGY
MANAGEMENT
2. The
competency
COMPETITION
creation
system
3. The motivation system.
she is likely to respond to it. If a different piece of data is received, the chief
sales force.
A NETWORK OF SALES
MANAGEMENT SYSTEMS
principles.
enormous
invest-
ed systems:
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Issue 8
STRATEGY
MANAGEMENT
COMPETITION
at penetration by product/service, by
and patterns.
sources in accordance
purchases is difficult
SYSTEM
of customers or cus-
questioning by sales-
curate information.
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Third Quarter 97
STRATEGY
MANAGEMENT
COMPETITION
pricing.
The
old
compensation
of products/services/accounts and
an outstanding performer.
that direction.
45
Issue 8
STRATEGY
MANAGEMENT
COMPETITION
CONCLUSION
in a radically different
decades.
sales
from a tactical to a
salespeople.
The
companies at a mini-
If your company is
contest.
46
Third Quarter 97
&
SB
STRATEGY
MANAGEMENT
47
Issue 8
COMPETITION