Business-to-Business Marketing Sales Force Design and Management - PowerPoint PPT Presentation

Loading...

PPT – Business-to-Business Marketing Sales Force Design and Management PowerPoint presentation | free to download - id: 40b634-Yzg4Y



Loading


The Adobe Flash plugin is needed to view this content

Get the plugin now

View by Category
About This Presentation
Title:

Business-to-Business Marketing Sales Force Design and Management

Description:

Business-to-Business Marketing Sales Force Design and Management Haas School of Business UC Berkeley Fall 2008 Week 6 Zsolt Katona * * * Comments/Suggestions ... – PowerPoint PPT presentation

Number of Views:322
Avg rating:3.0/5.0
Slides: 26
Provided by: GSB
Category:

less

Write a Comment
User Comments (0)
Transcript and Presenter's Notes

Title: Business-to-Business Marketing Sales Force Design and Management


1
Business-to-Business Marketing Sales Force Design
and Management
  • Haas School of Business
  • UC Berkeley
  • Fall 2008
  • Week 6
  • Zsolt Katona

1
2
Comments/Suggestions
  • Industrat
  • Midterm overview
  • Relate more to cases/lectures
  • Less time for Industrat
  • More info for first few decisions
  • More on Internet
  • More B2B theories

Next class Decision times 80-100min
Last three weeks Week 14 Online Marketing and B2B
3
Sales Force
  • 1. Size of the sales force
  • 2. Allocation of the sales force
  • 3. Compensation of the sales force
  • 4. Motivation of the sales force

4
1. Size of the sales force
  • The S-shaped response curve
  • Dynamics of the sales response curve
  • What does the sales force do?
  • Estimation of the sales response curve
  • Experimentation
  • Historical Data Analysis
  • Delphi Method

5
Response Curve
6
2. Allocation of the sales force
  • Sales teams
  • Salesperson - Account representative
  • Engineer - Systems Engineer
  • Service and Support
  • Administrator
  • Specialized sales teams
  • by industry
  • by geography
  • by transaction type (e.g. open bid, re-buy, RFP)

7
Sales force allocation
  • Allocate Sales teams by macro-segments (i.e
    according to specialization)
  • Allocate Team members by micro-segments (i.e.
    according to decision makers in the DMU)

8
3. Sales force compensation
  • Approach 1 To what extent should the sales force
    be part of the firm
  • Transaction Costs Analysis (Williamson)
  • Q Where are the boundaries of the firm?
  • Approach 2 How should the contract be designed
    for the sales-people (agents)
  • Agency Theory - Contract theory
  • Q What proportion of the salespersons
    compensation is salary vs. commission?

9
Two extreme types of compensation systems
  • Outcome Based Performance evaluated on a few
    observable results (e.g. sales)
  • Mostly variable compensation (commission, bonus)
  • Sales-person bears the risk of low sales
  • Behavior based Performance evaluated on observed
    behavior set by management
  • Mostly fixed compensation (salary)
  • Company bears the risk of low sales

10
Types of systems (cont.)
  • Outcome based
  • Little control (contact, authority) of management
  • Decentralized
  • Informal
  • Ad-hoc
  • Behavior based
  • High level of management control
  • Centralized
  • Formal
  • Structured (well-defined processes)

11
Behaviors that result from the different systems
  • Behaviors are a result of
  • Self selection In the long-run only certain
    types of employees stay with the firm
  • Adaptation Even the same employees adjust their
    behavior to the incentive system

12
Behaviors
  • Outcome based
  • Focused on tangible results
  • Often work harder
  • Good at individual selling
  • Willing to take risks
  • Entrepreneurial
  • Independent (freely disagree with management)
  • Behavior based
  • Less focused on tangible results
  • Often work less hard
  • More team oriented
  • Risk averse
  • Implementor
  • Cooperative/tolerant (agree with management)

13
Behaviors (cont.)
  • Outcome based
  • Stronger customer relationship
  • Takes more customers side
  • Less loyal to company (switches job easily)
  • Very interested in tangible results (, trips,
    etc.)
  • Behavior based
  • Weaker relationship with customer
  • Takes more companys side
  • Loyal (job switch less likely)
  • More interested in self-rewards feeling of
    achievement, personal growth, etc.

14
Behavior (cont.)
  • Outcome based
  • Has less knowledge of
  • product line
  • company
  • Often substitutes analysis with effort
  • Somewhat more likely to engage in ethically
    questionable behavior
  • Behavior based
  • More knowledge of
  • product line
  • company
  • Works smarter (analysis, expertise)
  • Less likely to engage in ethically questionable
    behavior

15
When are different systems appropriate?
  • In terms of achieving certain organizational
    goals
  • In terms of performing in different business
    environments

16
Which system when? Organizational Objectives
  • Outcome based
  • To achieve short term tangible results (sales,
    market share, etc)
  • To lower overhead
  • To promote entrepreneurial sales spirit
  • Generate knowledge about customers
  • Behavior based
  • To generate long term results
  • implement a complex strategy
  • achieve loyalty/control
  • To teach salespeople
  • To grow good managers
  • To promote teamwork

17
Which systems when? Business environment
  • Output based
  • When output is clearly measurable
  • When output depends strongly on unobservable
    behavior
  • When sales process and products are not too
    complex
  • Behavior based
  • When inputs are better observed than outputs
  • When output is vaguely related to behavior
    (uncertainty)
  • When sales process and products are very complex
    and require non sales-related activities
    (traveling)

18
Mixed systems
  • Extreme outcome/behavior based systems almost
    never exist
  • Mixed systems
  • commission is some proportion of salary
  • management control exists but limited
  • Mixed systems need to be consistent incentive
    structure has to fit the level of control
    (authority)

Motivation (effort)
Coordination
19
Examples of inconsistent systems
  • Low salary/high commission
  • Activist managers
  • want reports
  • severe sales-process policy
  • Result conflict
  • High salary/low commission
  • No managerial support/direction
  • Manager is out, selling
  • No monitoring of behavior
  • Result wasted resources

20
Summary on compensation systems
  • Each system has its advantages and drawbacks
    (avoid management fads)
  • An optimal system is probably a mixed system
  • The system has to be consistent
  • Dont send conflicting signals to salespeople
  • Dont ask actions that you cannot get/observe
  • Avoid having conflict between management and
    salespeople

21
Soft motivation (IMAGE)
  • Beyond financial incentives, the sales force also
    needs to be motivated psychologically internal
    marketing
  • The tension is between
  • fueling competition between salespeople
  • making sure they feel safe (to avoid
    unpredictable/unproductive behavior).
  • Some basic principles
  • People like to compete against other people
    instead of abstract standards. (competition based
    on rankings).
  • People become de-motivated if they are too far
    ahead or behind others.
  • Reward system needs to be fair on average only.
  • People need unexpected rewards (surprises) to be
    motivated (wear out).
  • People prefer frequent and small rewards to
    infrequent large ones.
  • Large rewards promote counter productive
    political behavior (gaming).
  • Competition needs face-saving device not to
    de-motivate the losers.

22
Industrat Stock Prices
22
23
Prediction Market
23
24
Licensing in Industrat
Product Technology Project Res Sus BCost KALA
2 PKALA 10000 50 280 Firm 1 can
license this project to another firm that does
not have Technology 2 (sample licensing
contracts). Custom contract you license all
current and future projects developed based on a
technology (like in joint ventures).
Product Technology Project Conv Cond BCost LAME
5 (LOMEX) PLAA 100 200 750
24
25
Breaking News
Firm 2 has announced completion of a KOREX
prototype based on Technology 4.
Product Technology Project Res Sus BCost
- 4 PKEA 10000 50 160 Firm 2 is
offering the following standard licensing
contract to any interested party Annual fee
500,000, royalty 10
25
About PowerShow.com