Research Proposal on "Sales Management at Hanover-Bates Chemical Corporation"

Research Proposal 5 pages (1303 words) Sources: 2 Style: APA

[EXCERPT] . . . .

Sales Management at Hanover-Bates Chemical Corporation

Taking over the least profitable sales region in a company accustomed to exceptionally high margins despite the commodity-like status of their products is one of the most challenging sales management roles anyone can take. James Sprague steps into this role after the previous sales manager was most likely forced out or asked to leave, and Hank Carver, a sales representative with over 34 years of experience is passed over for the promotion. Yet the hard feelings that Hank has over not getting the manager job is the least of James Sprague's concerns as his region is in last place when it comes to profitability. Throughout this analysis the factors contributing to this low level of sales performance relative to profits are analyzed, including root cause analysis and recommendations for improving performance.

Analysis of the Northeast Sales District

In analyzing the factors contributing to the Northeast Sales District's lack of profitability performance it can be seen that the Sales Reps are spending the majority of their time on B. And C. level accounts, which by definition don't generate nearly as many sales yearly and often are purchasing lower-margin products. What is happening is that the 1998 sales development plan has been completely ignored and Sales Reps are going to accounts that they most likely can sell on relationship or habit alone. This shows that the Sales Reps in the Northeast are not as disciplined in their call strategies as North Central and are most likely relying more on an account maintenance strategy over a penetrate-and-radiate sales strategy (Kuster, Canales, 2008). In short the Northeast is most likely taking refill orders of plating chemicals and not really growing sales into the more profitable account areas. Table 1: Potential Accounts, Active Accounts, and Account Call Coverage.

Table 1: Potential Accounts, Active Accounts and Account Call Coverage

Potential Accounts

Active Accounts

Account Coverage

Northeast

A

90

8.14%

53

9.20%

1,297

20.06%

B

34.45%

36.46%

3,051

47.19%

C

57.41%

54.34%

2,118

32.76%

TOTALS

1,106

6,466

North Central

A

60

7.10%

42

9.55%

1,030

20.82%

B

33.85%

41.36%

2,618

52.92%

C

59.05%

49.09%

1,299

26.26%

TOTALS

4,947

This point becomes every clearer when sales by category and profit by category are analyzed as shown in Table 2: Analysis of Sales and Profits by Category. What this analysis shows that the amount of time dedicated to C-level accounts is draining margins while the secret of North Central's success is the ability to generate a disproportionally higher level of revenues from the B-category of accounts. This also shows that North Central Sales District has significantly more call strategy discipline and focus than Northeast. When the fact is considered that the Northeast has 6 sales reps and North Central only has 5, the implication of sales productivity and profitability become even more significant. Add in the fact that the Northeast sales manager's salary of $70,000 was the highest in his position within the company and the point of just how far this region has fallen in terms of effectiveness and productivity given the costs associated with running it.

Table 2: Analysis of Sales and Profits by Category

Sales By Category

Profit By Category

Northeast

A

1,830

26.86%

28.73%

B

3,362

49.35%

50.28%

C

1,620

23.78%

20.98%

TOTALS

6,812

North Central

A

1,502

24.19%

25.19%

B

3,404

54.81%

55.34%

C

1,304

21.00%

19.47%

TOTALS

6,210

The root cause of these factors can be attributed to the previous sales manager's lack of trust and poor attitude regarding the 1998 sales development plan. The performance problems of the Northeast Sales District however are more fundamental than that as sales reps are most likely calling on the smaller job shops that churn more than any of the other businesses in this industry, as can be inferred by the differences in account management statistics for the C. category of accounts over time. With high churn and relatively low per… READ MORE

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